ATHENS: The recapitalisation of Greece's banks will help boost depositors' confidence and speed up the lifting of capital controls, but their debt swaps to plug capital holes may hinder them from re-accessing debt markets, Moody's said on Thursday.
National Bank, Piraeus, Eurobank and Alpha offered bondholders to swap junior and senior debt for new shares as part of moves to fill capital gaps revealed in recent European Central Bank (ECB) stress tests.
Through their debt exchanges, the four banks generated equity capital of about 3 billion euros ($3.2 billion) between them, helping reduce their aggregate 14.4 billion euro capital hole in an adverse scenario in the ECB tests.
While the majority of bondholders accepted the voluntary swaps to avoid potential higher losses were the banks to go under resolution, the exchanges could hamper banks from tapping debt markets in the near term.
"Because bondholders contributed to banks' share capital increases, we expect that the swaps will also impair the banks' ability to access international debt markets over the next two years," said Nondas Nicolaides, a senior credit officer at ratings agency Moody's.
Alpha Bank's exchange offer brought a capital benefit of 1.01 billion euros, with peer Eurobank generating capital of 720 million. Both banks will not need to tap state aid to fill their capital holes.
National Bank and Piraeus, which will need to resort to the country's bank rescue fund HFSF to fill part of their shortfalls, generated 692 million euros and 602 million respectively.
"The implied losses that creditors sustain from these debt-to-equity swaps will likely reduce investors' appetite for Greek bank debt," Nicolaides said. "Nonetheless, a successful completion of their third recapitalisation in the past three years will be an important milestone in stabilising the ailing sector."
Comments
Comments are closed.