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 emerging markets.
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.
About IFC
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
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