ECONOMY

Banks to suffer in bond market

banks-to-suffer-in-bond-market

The majority of Greek banks say they have successfully tapped the market in the completion of their share capital increases, but Moody’s warns it will be difficult for Greek lenders to regain the confidence of bond investors in the future.

In a statement issued on Thursday, Moody’s noted that the debt haircut the Greek banks engaged in over the last few weeks through exchanging bonds for shares will render their future access to the international markets more difficult. The swap process had the characteristics of a “distressed exchange,” Moody’s argued, which constituted an unpleasant experience for bondholders, who will remember it next time a Greek bank tries to sell its bonds on the international market.

Alpha Bank and National had no problems in their capital increases, with the former announcing its share offering was oversubscribed 1.7 times, as the bank received offers of 2.7 billion euros having sought 1.55 billion. National has also successfully completed its offering and is expected to announce the details on Friday. Piraeus Bank is keeping its book open.

Along with the bond swap process Alpha has secured funds of 2.563 billion euros, covering its entire capital requirements. Upon the completion of the increase the bank will return to the private sector, which will control 89 percent of its shares. The stake of the Hellenic Financial Stability Fund (HFSF) will drop from 66.2 percent today to just 11 percent.

Besides the oversubscription of its capital increase, Alpha officials noted on Thursday the significance in the high quality of the participating investors.

The price has been set at 0.04 euros per share, at a discount of 34.4 percent from the closing of the stock market on Wednesday. On Thursday the stock declined just 6.56 percent, against an average drop of 15.08 percent in the banks index.

The completion of the transaction and the precise terms are expected after the disbursement of the 10 billion euros for the credit sector’s recapitalization.