Alpha Bank could issue a debut, EUR500m benchmark covered bond tomorrow (Thursday), after an “overwhelming” response, with an expected five year tenor considered key to interest in the deal, which has been structured to achieve CBPP3-eligibility.

Alpha Bank and leads Barclays, Citi, Commerzbank, JP Morgan and NatWest published an announcement this (Wednesday) morning giving further information on its plans, with a European roadshow marketing its potential EUR500m four to five year issue set to conclude today.

A syndicate banker at one of the leads told The CBR that the deal could be launched as soon as tomorrow – even despite a meeting of the ECB’s governing council tomorrow afternoon.

“The support for this name has been overwhelming and the roadshow has been a huge success,” he added. “In particular, people are very happy that we’re extending the duration compared to the previous Greek trades – it is super-important that we’re getting out towards five years rather than focussing on threes.

“The ECB meeting is expected to be a bit of a non-event, and we’re confident that could get the deal wrapped up before then, subject to market conditions.”

A person close to the project told The CBR that through the new covered bond issuance, Alpha Bank intends to “reinforce its potential in the current economic environment” and enhance and diversify its liquidity position.

“This transaction is expected to re-establish Alpha Bank’s presence in the international capital markets, to demonstrate once again its ability to diligently support such transactions, as well as contribute significantly to the implementation of the bank’s business goal for funding diversification by utilising all its assets efficiently and further accelerate its disengagement from the Emergency Liquidity Assistance.”

Alpha Bank is the only one of the big four Greek banks to have not issued a benchmark-sized covered bond following the market’s reopening by National Bank of Greece in October.

Following NBG’s EUR750m three year deal on 10 October – the first Greek bank bond since the Greek debt crisis – Eurobank Ergasias issued a EUR500m three year covered bond on 24 October, while Piraeus on the same date priced a EUR500m five year that was mostly privately placed with European institutions.

The public deals for NBG and Eurobank were both marketed on a yield basis, and priced at 2.90% and 2.98%, respectively.

Syndicate bankers at Alpha Bank’s leads cited as a reference the January 2023 Greek government bond at a yield of 2.769%.

They noted that on average covered bonds from Italy, Portugal and Spain trade 22bp through their underlying government bonds.

“We wanted to get people talking, as many accounts have done their credit work, and now the question is where the trade prices,” said the lead syndicate banker.

Alpha Bank’s expected new issue will have a soft bullet format, unlike its compatriots’ recent deals, which all had conditional pass-through (CPT) structures.

In its announcement today, Alpha Bank said the programme had been structured with the objective of meeting eligibility criteria for the ECB’s covered bond purchase programme, and this had been confirmed by the issuer on a self-assessment basis. It noted that final eligibility for the programme is dependent on the ECB’s decision.

The ECB announced in November that, as of 1 February, CPT programmes of issuers that do not have a first-best investment grade rating will be ineligible for its covered bond purchase programme, affecting the issuance of NBG and Eurobank.

Greek and Cypriot covered bonds that are rated below investment grade are currently eligible for CBPP3 provided they meet additional criteria, including a minimum overcollateralisation commitment of 25% – a commitment announced by Alpha Bank today.

Moody’s last week assigned Alpha Bank a B3 provisional rating for covered bonds to be issued under the Alpha Bank AE Direct Issuance Global Mortgage Covered Bonds programme. Alpha’s covered bonds are also rated B by Fitch.