renewed momentum from the 10-year bond issue/media/com/2019/files/oikonomiki... · index rose by...

GREEK FIXED INCOME MONITOR:

RENEWED MOMENTUM FROM THE 10-YEAR

BOND ISSUE

FEBRUARY 2019

Ilias Lekkos

Dimitria Rotsika

Haris Giannakidis

ECONOMIC RESEARCH & INVESTMENT STRATEGY

BLOOMBERG TICKERS

Piraeus Bank Government Bond Index: {PBGGGSBI Index<GO>}

Weighted Average Yield: {PBGGGWAY Index<GO>}

Piraeus Bank Government Bond Index : {PBGGGCBI Index<GO>}

Weighted Average Yield : {PBGGIWAY Index<GO>}

GREEK FIXED INCOME MONITOR

2

Latest Developments in

the Greek Bond Market

Piraeus Bank Greek

Government Bond Index

Piraeus Bank Greek

Corporate Bond Index

DEVELOPMENTS IN GOVERNMENT BOND MARKET

Source: Piraeus Bank Research

• The upward trend in the Piraeus Bank Government Bond Index

recorded in the previous month continued in February, despite

concerns by the European Commission and Fitch about a potential

disruption in fiscal discipline. In particular, the government bond

index rose by 1.9% at the end of February compared to the

previous month, reaching a new high at 514 points. In addition, in

the last 10 days of the month, there was a recorded strengthened

upward trend in the government bond index, mainly originating

from reports for a 10-year issue in early March, as well as

significant gains from the recently issued 5-year bond. Specifically,

the yield to maturity of the five-year bond maturing in 2024

declined in February by 42 basis points, reaching 2.83%, while a

further decline was also recorded in early March.

• The catalyst for the positive government bond dynamics was the

combination of Moody’s credit rating upgrade of Greece’s

sovereign debt and the strong investment interest for the 10-year

issue. Specifically, in early March, Moody’s upgraded the credit

rating of the Greek sovereign bonds by two notches to B1 with

stable outlook. The better-than-expected rating worked as a signal

confirming the stabilization of the country’s economic conditions

and all three rating agencies now converge on their credit

assessments.

• As a result, total bids for the 10-year bond reached €12 billion and

the bond issue was oversubscribed by almost 5 times. Typical of

the significant demand was the fact that despite the initial

guidance for the interest rate at 4.125%, the final rate closed at

3.9% and the coupon was set at 3.85%.

BOND INDEX PERFORMANCE

CREDIT RATINGS

3

-1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

Piraeus Bank Corporate ex Financials Bond

Index

Piraeus Bank Government Bond Index

Barclays Corporate High Yield Bond Index

Barclays Government Bond Index

MoM

YtD

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Fitch

S&P

Moody's

AA-

BBB+BBB

BBB-BB+

BB

BB-

B+B

B-CCC+CCCCCC-CCCSD

DEVELOPMENTS IN CORPORATE BOND MARKET

• The Greek corporate bond market did not follow the upward trend of

government bonds, since the Piraeus Bank Corporate Bond Index recorded

losses mainly due to the plummeting prices of the two bond issues of

Intralot. Specifically, the index recorded losses of 0.64%, reaching 133.7

points at the end of February, starting from 134.5 units at the end of the

previous month. The price drop in the index emerged after the market

priced the idiosyncratic risks of Intralot’s two bonds (ISIN: XS1685702794 and

XS1405774727), with an aggregate 11% weight in the overall capitalization of

the index. In particular, the two bonds recorded losses of 8.9% and 16.5%

respectively.

• Concerns about the renewal of key company contracts mainly on the Turkish

market and the uncertainty about the company’s leverage have reversed the

upward trend of Intralot’s bonds last month. The bond price pressures were

accompanied by Fitch’s downgrading from B to B- with negative outlook

and by Moody’s from B3 to Caa1. On the other hand, Moody’s upgraded the

Greek Telecoms credit rating by two notches, to Ba2 from B1 with stable

outlook, while Fitch upgraded the credit rating of Crystal Almond by one

notch, namely from B- to B.

• Despite the pressures on the corporate bond market, the index valuation in

February shifted upwards, mainly due to an increase in the ESI from 99.6

points to 101.3 and the PMI in manufacturing, which increased from 53.7 to

54.2. An equally important determinant was the strengthened demand for

high yield bonds as reflected by the 1.6% increase in the IBOXX index

(Bloomberg Ticker: IBOXXMJA).

• Similarly to the evolution of the key drivers of the Greek corporate bond

index, the liquidity index recorded a drop (improvement) of 6%. The bond

issue of the 7-Year bond of Aegean Airlines was completed in March raising

€200 million. Demand was approximately 2.5 times the offer, thus amounting

to €527.7 million. The bond coupon was set at 3.6%, i.e. very close to the

lower band of the anticipated bond rate range.

CORPORATE BOND INDEX VALUATION

CORPORATE BOND LIQUIDITY INDEX

Source: Piraeus Bank Research 4

0

25

50

75

100

125

150

175

200

225

250

275

300

Jan-13

Ap

r-13

Jul-1

3

Oct-1

3

Jan-14

Ap

r-14

Jul-1

4

Oct-1

4

Jan-15

Ap

r-15

Jul-1

5

Oct-1

5

Jan-16

Ap

r-16

Jul-1

6

Oct-1

6

Jan-17

Ap

r-17

Jul-1

7

Oct-1

7

Jan-18

Ap

r-18

Jul-1

8

Oct-1

8

Jan-19

-20

-10

0

10

Feb

-13

Ap

r-1

3Ju

n-1

3A

ug-

13

Oct

-13

Dec

-13

Feb

-14

Ap

r-1

4Ju

n-1

4A

ug-

14

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5Ju

n-1

5A

ug-

15

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6Ju

n-1

6A

ug-

16

Oct

-16

Dec

-16

Feb

-17

Ap

r-1

7Ju

n-1

7A

ug-

17

Oct

-17

Dec

-17

Feb

-18

Ap

r-1

8Ju

n-1

8A

ug-

18

Oct

-18

Dec

-18

Feb

-19

Error

100

110

120

130

140

Greek Corp. Bond Index

Model Estimate (EU HY BondIndex, ESI, L/D Rate Spread)

GREEK CORPORATE BOND PERFORMANCE

• Following three bonds recorded the lowest performance:

~ INTRALOT (-16.5%) maturing in 2024

~ INTRALOT (-8.9%) maturing in 2021

~ B&F (-3.2%) maturing in 2023

• Following three bonds recorded the highest return:

√ TITAN (0.88%) maturing in 2024

√ Greek Telecoms (0.84%) maturing in 2022

√ MYTILINEOS (0.72%) maturing in 2023

• The bond issue of the 7-Year bond of Aegean Airlines was completed in

March raising €200 million. Demand exceeded the offer by approximately 2.5

times amounting to €527.7 million. The bond coupon was set at 3.6%, i.e. very

close to the lower band of the anticipated bond rate range.

MONTHLY PERFORMANCE OF CORPORATE BOND INDEX MEMBERS


-15.0 -13.0 -11.0 -9.0 -7.0 -5.0 -3.0 -1.0 1.0

COCA-COLA (2020)

OTE (2018)

PPC (2019)

TITAN (2019)

ELPE (2019)

OTE (2020)

OTE (2019)

COCA-COLA (2024)

TITAN(2021)

INTRALOT CAPITAL (2021)

ELPE(2021)

WIND (2021)

HOUSEMARKET (2021)

OPAP (2022)

MOTOROIL (2022)

SUNLIGHT (2022)

MYTILINAIOS (2022)

TERNA ENERGY (2022)

INTRALOT CAPITAL (2024)

TITAN(2024)

DELTA TECHNIKI (2024)

GEK TERNA (2025)

CORAL(2023)

B&F(2023)

OTE(2022)

PIRAEUS BANK GREEK GOVERNMENT BOND INDEX

BOND RETURNS HISTOGRAMINDEX EVOLUTION FEBRUARY 2019 (BASE DATE: 9/3/12=100)

• In February, the lowest index value was 503 while the highest value was 514.

• The value of the Greek Government Bond Index on 28th February was 1.9% higher

compared to the previous month.

• The analysis of historical data reveals that monthly return at the end of February was

higher than 85% of realized past returns. This implies that returns, lower or equal to 1.9%,

were realized during 62 months out of the total of 83 months of available data.

*(Returns with low frequency of occurrence are less likely to be realized in the near future).

28-February

Members 9

Market Capitalization (EUR bn) 36.78

Weighted Average Yield 3.37

Weighted Average Coupon 3.90

Weighted Average Maturity 10.54

Weighted Average Duration 8.07


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Fre

qu

en

cy

Monthly Returns

0

5

10

15

20

25

30

0

100

200

300

400

500

600

May-

12

Sep

-12

Jan-1

3

May-

13

Sep

-13

Jan-1

4

May-

14

Sep

-14

Jan-1

5

May-

15

Sep

-15

Jan-1

6

May-

16

Sep

-16

Jan-1

7

May-

17

Sep

-17

Jan-1

8

May-

18

Sep

-18

Jan-1

9

Price (LHS)

Yield (RHS)

PIRAEUS BANK GREEK GOVERNMENT BOND INDEX

INDEX COMPOSITION– FEBRUARY 2019

NameIssue Amount

(€ bn)

Amount

Outstanding

(€ bn)

Currency Coupon Coupon TypeCoupon

Frequency

Next Coupon

PaymentIssuance Date Maturity

Credit Rating

(Standard &

Poor's)

Last Price - 28

February

Yield – 28

February

Hellenic Republic Government Bond 4.03 4.03 € 4.750 Fixed Annual 17/04/19 10/04/2014 17/04/19 B+ 100.5 0.3










PIRAEUS BANK GREEK CORPORATE BOND INDEX

BOND RETURNS HISTOGRAMINDEX EVOLUTION FEBRUARY 2019 (BASE DATE : 02/01/13=100)

• In February, the lowest index value was 133.5 while the highest value was 134.9.

• The value of the Greek Corporate Bond Index on 28th February decreased by 0.6%

compared to the previous month.

• The analysis of historical data revealed that MoM return at the end of February was

higher than 12% of realized past returns. This implies that returns, lower or equal to -0.6%,

were realized in 9 months out of the total of 73 months of available data.

*(Returns with low frequency of occurrence are less likely to be realized in the near future).

28-February

Members 24

Market Capitalization (EUR bn) 7.05

Weighted Average Yield 3.79

Weighted Average Coupon 3.93

Weighted Average Maturity 2.78

Weighted Average Duration 2.22


0

2

4

6

8

10

12

14

16

90

95

100

105

110

115

120

125

130

135

140

Mar-

13

Jun-1

3

Sep

-13

Dec-

13

Mar-

14

Jun-1

4

Sep

-14

Dec-

14

Mar-

15

Jun-1

5

Sep

-15

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Sep

-18

Dec-

18

Price (LHS)

Yield (RHS)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Fre

qu

en

cy

Monthly Returns

PIRAEUS BANK GREEK CORPORATE BOND INDEX

INDEX COMPOSITION– FEBRUARY 2019

Company Name

Issue

Amount

(€ mn)

Amount

Outstanding

(€ mn)

Currency Coupon Coupon TypeCoupon

Frequency

Next Coupon

PaymentIssuance Date Maturity

Credit Rating

(Standard &

Poor's)

Last Price –

28 February

Yield - 28

February

COCA-COLA HBC FINANCE BV800.00 800.00 € 2.375

Fixed Annual18/06/19 18/06/13 18/06/20 BBB+ 102.38 0.52

PPC FINANCE PLC500.00 349.80 € 5.500

Fixed Semi-Annual01/05/19 08/05/14 01/05/19 CCC+ 99.85 6.35

TITAN GLOBAL FINANCE PLC300.00 160.61 € 4.250

Fixed Semi-Annual10/07/19 10/07/14 10/07/19 BB+ 101.40 0.30

HELLENIC PETROLEUM FINANCE325.00 325.00 € 5.250

Fixed Semi-Annual04/07/19 04/07/14 04/07/19 101.38 1.14

OTE PLC700.00 700.00 € 3.500

Fixed Annual09/07/19 10/07/14 09/07/20 BB+ 103.63 0.78

OTE PLC350.00 350.00 € 4.375

Fixed Annual02/12/19 02/12/15 02/12/19 BB+ 103.12 0.20

COCA-COLA HBC FINANCE BV600.00 600.00 € 1.875

Fixed Annual11/11/19 10/03/16 11/11/24 BBB+ 105.89 0.81

TITAN GLOBAL FINANCE PLC300.00 300.00 € 3.500

Fixed Semi-Annual17/06/19 17/06/16 17/06/21 BB+ 104.09 1.67

INTRALOT CAPITAL LUX250.00 250.00 € 6.750

Fixed Semi-Annual15/09/19 23/09/16 15/09/21 B- 73.89 20.47

HELLENIC PETROLEUM FINAN 375.00 449.53 € 4.875 Fixed Semi-Annual 14/04/19 14/10/16 14/10/21 105.81 2.56

HOUSEMARKET SA 40.00 40.00 € 5.000 Fixed Quarterly 01/05/19 04/10/16 04/10/21 102.71 3.89

CRYSTAL ALMOND SARL 250.00 345.00 € 10.000 Fixed Semi-Annual 04/04/19 04/11/16 01/11/21 B 107.46 6.87

OPAP SA 200.00 200.00 € 3.500 Fixed Semi-Annual 21/09/19 21/03/17 21/03/22 101.61 2.95

MOTOR OIL FINANCE PLC350.00 350.00 € 3.250 Fixed Semi-Annual 01/04/19 10/04/17 01/04/22 101.81 2.63

SYSTEMS SUNLIGHT ABEE50.00 50.00 € 4.250 Fixed Semi-Annual 20/06/19 20/06/17 20/06/22 102.29 3.54

MYTILINEOS HOLDINGS S.A. 300.00 300.00 € 3.100 Fixed Annual 27/06/19 27/06/17 27/06/22 101.90 2.51

TERNA ENERGY FINANCE 60.00 60.00 € 3.850 Fixed Semi-Annual 21/07/19 21/07/17 21/07/22 98.58 4.30

INTRALOT CAPITAL LUX 500.00 500.00 € 5.250 Fixed Semi-Annual 15/09/19 20/09/17 15/09/24 B- 58.01 17.36

TITAN GLOBAL FINANCE PLC 250.00 350.00 € 2.375 Fixed Semi-Annual 16/05/19 16/11/17 16/11/24 BB+ 98.86 2.59

DELTA TECHNIKI SA 6.50 6.50 € 5.500 Fixed Semi-Annual 22/06/19 22/12/17 22/12/24 100.00 5.49

GEK TERNA120.00 120.00 € 3.950

Fixed Semi-Annual04/04/19 04/04/18 04/04/25 100.30 3.89

CORAL 90.00 90.00 € 3.000 Fixed Semi-Annual 11/05/19 11/05/18 11/05/23 100.50 2.87

B&F 25.00 25.00 € 4.950 Fixed Semi-Annual 26/06/19 26/06/18 26/06/23 95.00 6.27

OTE PLC 400.00 400.00 € 2.375 Fixed Annual 18/07/19 18/07/2018 18/07/22 BB+ 103.21 1.39


GREEK FIXED INCOME MONITOR

Disclaimer: This document is produced by the Economic Research & Investment Strategy Department of Piraeus Bank (hereinafter "the Bank"), which is supervised by the European Central Bank (ECB), in

collaboration with the Bank of Greece and is sent or provided to third parties, without any obligation of its author. This document or any part of it should not be duplicated in any way without the prior

written consent of its author.

The information or opinions included in this document are addressed to existing or potential clients in a general manner, without taking into account the particular circumstances, the investment objectives,

the financial ability, the experience and/or knowledge of the potential recipients of this document and, as a result, they do not constitute or should not be considered neither as a solicitation or offer for the

conduct of transactions in financial instruments or currencies nor as a recommendation or advice for decision making in relation to those. Taking into account the aforementioned, the recipient of the

information contained in this document should proceed with his/her own research, analysis, and confirmation of the information which is included in this document and seek for independent and

professional legal, tax and investment advice, before proceeding with any investment decision making.

The information depicted in this document is relied on sources that the Bank considers to be reliable and is provided on an "as is" basis, however, the Bank cannot warrant as to their accuracy and

completeness. The opinions and estimates herein are related to the trend of the local and international financial markets at the indicated date (prices at closing time) and are subject to changes without any

prior notice. Notwithstanding the above, the Bank might include in this document investment researches, which have been conducted by third persons. In this case, the Bank does not modify those

researches, but it presents them on an "as is" basis, therefore, no responsibility is assumed in relation to the content of the aforementioned investment researches. The Bank is under no duty to update the

information contained in this document. Considering the above, the Bank, the members of its Board of Directors and the relevant persons assume no responsibility for the information included in the

present document and/or for the outcome of any investment decisions made according to such information.

Piraeus Bank Group is an organization with a significant presence in the Greek market and an increasing one in the international markets providing a wide range of investment services. In the context of

investment services offered by the Bank and/or any other Piraeus Group companies in general, there might be cases whereby conflict of interests may arise in relation to the information provided herein.

Reference should be made to the fact that the Bank, the relevant persons and/or other Piraeus Group companies indicatively:

a. Are not subject to any prohibition in relation to trading on own account or in the course of providing portfolio management services prior to the publication of this document or the acquisition of any

shares prior to any public offering or the acquisition of any other securities.

b. May offer upon remuneration investment banking services to issuers for whom this document may contain information.

c. May participate to the issuers' share capital or acquire other securities issued by the aforementioned issuers or attract other financial interests from them.

d. Might provide market making or underwriting services to issuers that might be mentioned in this document.

e. Might have published papers the content of which is different or incompatible to the information presented herein.

The Bank as well as the other Piraeus Group's companies have enacted, implement and maintain an effective policy, which prevents circumstances that may give rise to conflicts of interests and the

dissemination of any information among the departments ("chinese walls") and they also constantly comply with the provisions and regulations relevant to inside information and market abuse. Also, the

Bank confirms that it doesn't have any kind of interest or conflict of interest with a) any other legal entity or person that could have participated in the preparation of the present document and b) with any

other legal entity or person that couldn't have participated in the preparation of the present document, but had access to it before its publication.

It is duly stated that: the investments described in the present document include investment risks, among which the risk of losing the entire capital invested. In particular, it is stated that;

a. The figures presented herein refer to the past and that the past performance is not a reliable indicator of future performance.

b. In case the figures refer to simulated past performance, that past performance is not a reliable indicator of future performance.

c. The return on investments might be positively or negatively affected as a result of currency fluctuations, in case the figures are denominated in a foreign currency (other than Euro).

d. Any forecasts in relation to future performance, may not be a reliable indicator of future performance.

e. The tax treatment of the information as well as transactions pertained in this document, depends on each investor's individual circumstances and may be subject to change in the future.

As a result, the recipient should seek for independent advice in relation to the applicable tax legislation. The distribution of the present document outside Greece and/or to persons governed by foreign law

may be subject to restrictions or prohibitions according to the applicable legislation. Therefore, the recipient of the present should seek for independent advice in relation to the applicable legislation, in

order to look into such restrictions and/or prohibitions.

10

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