"Doom-loop" broken? NBG preps bond sale at lower yield than sovereign

The €750M 5-year unsecured note for National Bank of Greece (NBG -2.7%) is expected to come to market tomorrow maybe priced to yield as low as 4%. A recently government 5-year note is yielding 4.76%.

Banks typically must offer a higher yield than the underlying sovereign due to the perceived added safety of government paper, but Greece's default kind of blew up that model. "The new institutional framework for banks in the eurozone could make a strong case for banks pricing through their sovereigns in the future," says L&G credit research head Georg Grodzki.

"It doesn't make a lot of sense," says a syndicate banker, but people will buy the paper because they think it will perform.

European financial sector ETF: EUFN

Comments (2)
  • Ahmed Amin
    , contributor
    Comments (18) | Send Message
    I am in for NBG as over the long haul, this will probably be a great performing stock. It is highly invested in already and has a lot of assets.
    Also the word is several hedge funds are looking at it already.
    23 Apr 2014, 11:01 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    Borrowing costs dropping like a rock.


    The balance sheet may be fixed far faster than was expected back in 2012.
    23 Apr 2014, 01:23 PM Reply Like
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