Greek sub debt comeback conceivable


Greek banks could attempt to raise subordinated debt after strong conditions reopened the door for many of the banking sector’s black sheep, though some say it is far too early and that they will have to wait until after May’s stress tests.

Some of Europe’s weakest institutions charged back into the bond market in 2017 and early 2018, touting cleaned-up balance sheets and helped by investors’ desperation for decent yields in a world of central bank easing.

IKB Deutsche Industriebank, one of the first lenders to topple in the 2007 financial crisis, was the latest such example, finding over 1.3 billion euros of demand last week for an unrated 300-million 4 percent 10-year non-call five-year Tier 2.

After successful bank transactions out of Spain, Italy and Portugal, the spotlight has inevitably shifted to the Greek lenders after their debt was effectively wiped out in 2015 to help plug a 14.4-billion-euro capital hole.

The big four – National Bank, Eurobank, Piraeus and Alpha – have all issued covered bonds since October, but bankers believe a sale of riskier subordinated debt is also feasible.

“The Greek banks are looking into re-entering the market,” said one. “Some are even thinking they can get an Additional Tier 1 done. If IKB can do Tier 2, the Greek banks can as well.”

But others view a comeback prior to the European Central Bank’s stress tests of the Greek banks, planned for May, as impossible.