Piraeus bags big book for senior preferred offering

3 min read
Tom Revell

Piraeus Bank built the biggest order book for a Greek senior preferred issuance to date as it pulled in €1.7bn of orders for a €500m six-year non-call five senior preferred on Tuesday.

The bonds of Piraeus and its fellow big four Greek banks have performed strongly over recent months, supported by upgrades from Moody's and Fitch in September and, more recently, a revival of investors' risk appetite amid growing confidence that rates have peaked.

That progress is evident in the performance of Piraeus's previous senior preferred issuance this year, a €500m five-year non-call four note priced at 7.25% in July that was trading at around 6.75% at Tuesday's open, according to Tradeweb figures.

"[Piraeus] have had a pretty good rally," said a banker away from the deal. "They are the weakest name in the region and for a significant period were demonstrably wide, but they have started to see the fruits of their labour and have outperformed the others in terms of the catch up, so from a timing perspective, this [deal] makes sense."

After announcing the deal on Monday, leads BNP Paribas, Bank of America, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS opened books with initial price thoughts set at 7.125% area on Tuesday morning. Around one hour and 15 minutes later, the leads announced that the book had surpassed €1bn.

Orders continued to come in and with the book topping €1.6bn, the leads launched a €500m trade at a yield of 6.875%.

The final book stood at €1.7bn - the largest of any Greek senior preferred bond since the country's banks began issuing in the format, according to IFR data.

That demand allowed Piraeus to price the deal with just 12.5bp of new issue premium at most, said bankers, with some arguing it landed flat to fair value.

"It's a very good book," said a banker at one of the leads. "It's priced basically at fair value, which is a great result, and there are a lot of investors in there, with good Greek support ... big real money investors and a few hedge funds."

In September, Moody's upgraded the senior unsecured debt ratings of Piraeus to Ba2 from B1 while Fitch upgraded the bank's Issuer Default Rating to BB– from B. Piraeus remains one of the lower rated of the big four Greek lenders - alongside Alpha Bank.

Piraeus's deal offered a pick-up of some 62.5bp to a €500m six-year non-call five senior preferred priced by Eurobank at 5.875% last Tuesday, on more than €1.4bn of demand. Eurobank's deal is higher rated, with ratings of Ba1/BB-/BB.

Tuesday also saw senior preferred supply from Mediobanca and Hamburg Commercial Bank.

Italian lender Mediobanca sold a €500m long six-year non-call five senior preferred at 140bp over mid-swaps, tightening from IPTs of 170bp area on more than €1.5bn of demand. BNP Paribas, IMI-Intesa Sanpaolo, Mediobanca, Morgan Stanley and Nomura were the bookrunners.

A lead banker said Mediobanca's deal, like that of Piraeus, priced roughly flat to fair value.

HCOB, meanwhile, landed a €500m two-year FRN at 160bp over three month Euribor, down from IPTs of 170bp area, with demand last reported above €560m. Bank of America, Deutsche Bank and LBBW led the deal.