Athens, 24 October 2017—IFC, a member
of the World Bank Group, has invested €40 million in mortgage covered
bonds issued by the National Bank of Greece (NBG), supporting NGB in regaining
access to international capital markets and boosting investor confidence
in the Greek economy.
The three-year maturity bond is backed by
a portfolio of residential mortgages. Due to high market demand, the final
issuance size was raised to €750 million, from the original target of
€500 million, with mainly private investors including asset management
companies, pension funds, and other investment institutions. The vast majority
of the bonds were allocated to international investors, allowing for a
significant inflow of international funds to Greece for the first time
in three years.
Vassilis Kavalos, Group Treasurer of NBG
said: “We welcome IFC’s investment and support for this transaction.
Our issuance was warmly welcomed by the market, with very high demand allowing
us to re-establish our presence in international capital markets in the
best possible way.”
The landmark investment fits into IFC’s
strategy in Greece to strengthen the financial system and boost long-term
funding. IFC has invested in a number of NBG subsidiary banks in the Balkans
and Turkey since 2010 and deepened its engagement last year, becoming a
minority shareholder in NBG when it participated in the recapitalization
of leading Greek banks, to help restore financial sector stability. IFC
also provided a trade finance line of €100 million to NBG as part of its
Global Trade Finance Program.
“This important transaction is a strong
signal for increasing confidence in the economy from both domestic and
international investors,” said Manuel Reyes Retana, IFC’s Regional Industry
Head for Europe, the Middle East and North Africa. “This is the first
time the country’s banking sector has tapped international capital markets
since 2014, a good indicator of market confidence in an economic recovery.”
Covered bonds offer an attractive funding
cost and are viewed as low-risk since they are backed by the assets of
the issuing banks. They provide access to long-term funding for the issuing
banks, while also increasing access to more affordable, long-term funding
for borrowers. IFC’s investment will also help revive Greece’s real estate
sector as it will allow NBG to issue more residential mortgage loans.
IFC has an exposure of over €600 million
in Greek financial institutions and companies operating inside and outside
the country. IFC has been a long-term partner of Greek companies and financial
institutions, through support to subsidiaries of Greek banks in Eastern
and Southeastern Europe, and has also helped Greek companies expand into
IFC began operating in Greece in 2015 at
the request of the Greek government, investing €405 million in long-term
investments in eight projects and extending a total of €275 million in
trade finance lines.
IFC, a member of the World Bank Group, is
the largest global development institution focused on the private sector
in emerging markets. Working with more than 2,000 businesses worldwide,
we use our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY16, we delivered a record $19
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org