Bankers say successful sales this year from Hellenic Telecommunications Organization, or OTE, and Hellenic Petroleum may encourage others to issue bonds as a way to diversify their funding options, which have been limited since Greece requested an international bailout in 2010.
Just three benchmark-size bonds have been sold by Greek companies since 2009, according to Dealogic, though there has been a handful of smaller deals too from the likes of FAGE, a yogurt maker, and Titan Cement. Sky-high funding costs, and concerns about Greece leaving the euro zone, have weighed on potential new issuance.
But, since European Central Bank President Mario Draghi promised last summer to do “whatever it takes” to save the euro, borrowing costs for companies in southern Europe including Greece have continued to fall.
Shortly before Mr. Draghi’s pledge, the yield on OTE’s 7.25% three-year bond issued in April 2011 had ballooned to an eye-watering 30%, Tradeweb data show. That bond is now trading at around 2.95%.
Commercial refrigeration and glass-bottle producer Frigoglass is the latest Greek company to take advantage of these lower yields for the country’s corporate debt as it goes ahead with its debut bond sale Monday.
Frigoglass said it plans to raise €250 million ($323.5 million) from the five-year deal.
More bonds from Greek companies could follow too.
“There are a handful of major names in Greece which have debt capital market aspirations,” said Matthew Palmer, a director of corporate debt origination at HSBC. “Clearly this is a very strong [issuance] window and it has attracted a number of Greek corporates to look at it seriously.”
The higher yields Greek companies have to pay relative to borrowers in Europe’s strongest economies may also appeal to investors whose potential returns are hamstrung by record low interest rates.
For instance, oil refiner Hellenic Petroleum–which doesn’t have a credit rating–attracted €3.5 billion of demand for its €500 million, four-year deal at the end of last month, paying investors a coupon of 8%. By contrast, the average yield for investment-grade corporate bonds issued in euros is 2.12%, according to a Markit index.
Bankers away from the Hellenic Petroleum deal said demand was likely driven by wealthy Greek investors, private banks and U.S. and U.K. hedge funds.
Some also see the demand for Greek corporate debt as a vote of confidence from bondholders who are prepared to take a punt on the country again.
“We’re getting a consistent message from investors that they are growing increasingly comfortable with Greece and are more willing to take a look,” said Jason Bruhl, head of European high yield syndicate at Citigroup in London.
Mr. Bruhl says the bank is in discussions with a handful of Greek firms about issuing new bonds
Source: Τhe Wall Street Journal.
