Greece

Greece is expected to return to the bond market before the end of the year, after it exited its third bailout programme on Monday, August 20. But the sovereign needs the ‘perfect’ window amid emerging and peripheral market volatility, said bankers.

After Fitch upgraded Greece’s country ceiling into investment grade territory last Friday, the covered bond ratings of National Bank of Greece and Alpha Bank should also improve with spreads on Alpha's recent five year having the best potential to tighten.

The European Central Bank will drop its waiver for Greek bonds to be used as collateral, following the sovereign’s exit from its third bailout programme on August 20.

Greece’s planned return to the 10 year part of its euro benchmark curve is likely to be in late August or early September, according to market sources.

National Bank of Greece has sold a €200m five year covered bond to the European Investment Bank (EIB) just as Moody’s changed its outlook on the Greek banking sector to positive.

The Greek banking sector could receive European Central Bank monetary policy support once Greece has exited its bailout programme in August, according to a senior strategist.

Greece is not likely to join the European Central Bank’s Public Sector Purchase Programme after it exits its bailout programme, according to a senior rates strategist.

S&P Global Ratings has revised Greece’s outlook from stable to positive, with an upgrade on the horizon if the sovereign meets certain criteria.

National Bank of Greece (NBG) won an investment grade covered bond rating this week, showing the way for European Central Bank (ECB) repo eligibility to other Greek banks. Along with a more stable fiscal and political backdrop and an imminent exit from its bail-out programme, Greek covered bonds have a good chance of outperforming Italian versions.

Standard & Poor’s assigned an investment grade rating to the National Bank of Greece’s (NBG) conditional pass through (CPT) covered bond programme on July 6.

Market sources said rising political uncertainty in the eurozone was to blame for the second deal pulled from the European high yield bond market so far in May, as Greek issuer Pangaea cancelled its high yield roadshow on Thursday.

Covered bond investors would be better off ensuring a full recovery and maturity extension than accepting a partial recovery and claiming the remainder from the insolvency estate of the issuer, according to delegates who voted at the IMN conference in London on Tuesday.