Trade View: Banking on Greece and Alpha Bank – #SaxoStrats
Greece is the last country in the periphery to show signals of economic recovery and yet is paying a considerably higher yield compared to its peers. GDP growth is finally starting to accelerate and unemployment is declining. If positive momentum continues, the country will be able to decrease its debt burden, which at the moment accounts for approx. 180% of gross domestic product. Not only will Greek banks benefit from an economic recovery, but they are now better positioned to handle adverse scenarios as their CET1 positions are stronger than compared to three years ago. We expect Greek banks to pass the upcoming European Central Bank stress test.
Investors should be aware that although Greek banks’ credit quality is improving, there is still a great amount of bad loans that negatively affects local banks’ balance sheet. The bond can suffer from increased ECB interest rates and potential rating downgrades. This instrument can also be sensitive to headlines concerning the end of the bailout program. Do remember, because this is a recovery story, default is always a risk.
Minimum piece is 100,000 nominal EUR with 1,000 nominal EUR increments. Return objective is primarily repayment and coupon payment.
Figure 1: In orange yield of Alpha Bank 2.5% 2023 yield since issuance.