Senior unsecure

10 September 2015 By Neil Unmack Follow @unmack1

Senior debt of Greece’s lenders is trading around half face value. The prices show investors know a bank restructuring will mean losses. Gauging the scale of these depends not just on Greece’s erratic economy but their treatment by regulators. This is currently up in the air.

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Piraeus Bank’s 5 percent bond due March 2017 is trading at 45.136 percent of par, according to Thomson Reuters Eikon data. The bonds were bid at 67 cents on June 10 and 85 cents at the start of the year.

National Bank of Greece’s 4.375 percent bond maturing April 2019 is trading at a price of 55.25 cents, according to Thomson Reuters Eikon. The securities have fallen from 76.5 cents at the start of the year.

Holders of Greek banks’ senior debt may be required to shoulder losses as part of a restructuring plan for the country’s financial sector in a 86 billion euro bailout.

“Greece has committed to take decisive measures to safeguard stability, including a recapitalisation of the banks as required, measures to enhance the insolvency framework and a significant improvement of the governance of the banks and the Hellenic Financial Stability Fund,” euro zone government ministers said in a statement on Aug. 14. “Following the results of the Asset Quality Review and Stress Tests before the end of the year, the bail in instrument will apply for senior debt bondholders whereas bail in of depositors is excluded.”

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