UPDATE 1-National Bank of Greece plans senior unsecured bond sale

Thu Apr 17, 2014 4:22am EDT

By Aimee Donnellan

Reuters

LONDON, April 17 (IFR) - National Bank of Greece, rated Caa1/CCC/B-, is preparing to sell the second senior unsecured bank bond from the country in the past four weeks, with fixed income investors increasingly willing to back Europe's most troubled credits.

NBG has mandated Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC and Morgan Stanley to arrange investor calls and a group presentation in London next week to discuss a possible senior unsecured bond transaction.

The deal is expected to be 750m in size, a senior NBG executive told Reuters on Wednesday.

Greek banks have joined a wave of eurozone peripheral lenders taking advantage of investors' renewed hunt for yield.

In a deal that marked a watershed moment, Piraeus Bank, also rated Caa1/CCC/B-, last month sold the first senior unsecured bond from the country since 2009.

The 500m three-year deal came at a yield of 5.125% and is now bid at 3.627%, according to Tradeweb.

Greek banks' rehabilitation back in the wholesale funding market follows balance sheet stress tests earlier this year that identified the extent of their capital shortfalls.

National Bank of Greece will become the fourth Greek lender to tap international markets through a share offering. It plans to raise up to 2.5bn to boost its core capital, according to Reuters.

The cost of insuring senior bank debt against default, as measured by the iTraxx Senior Financials index, has dropped from over 300bp in November 2011 to 80bp, while Greek 10-year bond yields - which stood at over 30% in the middle of 2012 - have rallied 210bp since the start of the year to 6.15%. (Reporting by Aimee Donnellan; editing by Alex Chambers, Julian Baker)