(Bloomberg) -- A Greek lender slashed its cost of capital, underscoring a rally in the country’s assets amid credit-rating upgrades and the broader clamor for the riskiest type of bank debt.
Alpha Services and Holdings SA, the holding company of Alpha Bank SA, raised €300 million ($332 million) of Additional Tier 1 bonds on Tuesday at a coupon of 7.5%, according to a person familiar with the matter who asked not to be identified. That was more than 4 percentage points below the level at which the Athens-based bank raised AT1 capital in early 2023.
The deal signals a further normalization in money-raising conditions for banks in Greece. Formerly a poster child of the euro area’s debt crisis, the country regained its investment-grade status last year after more than a decade. It also reflects an ongoing rally in the junior debt, coming alongside an issue-plus-buyback operation by Bank of Ireland Group Plc and hot on the heels of a sale by Dutch ABN Amro Bank NV, which carried the smallest coupon among euro-denominated issues this year.
“The AT1 primary market is currently active, with banks benefiting from tightening spreads and favorable differences between initial pricing and final coupons, as well as between issue and current spreads,” said Sebastien Barthelemi, head of credit research at Kepler Cheuvreux.
A spokesperson for Alpha didn’t respond to a request for comment.
The offering drew orders of more than €2.7 billion, according to the person familiar with the sale.
When Alpha sold its debut AT1 in early 2023, it paid a coupon of 11.875%, almost double the coupon in a multicurrency index by Bloomberg at the time. That note is currently indicated at about 114 cents on the euro, which corresponds to a yield of 7.4% until its first optional call in 2028.
The average yield in the AT1 space stands at about 6.9%, down from about 8.3% at the start of the year, according to Bloomberg indexes. The so-called contingent convertible, or CoCo, market is approaching double-digit returns in one of its least volatile years on record.
Greece was raised to investment-grade status, which makes its debt eligible for purchase by the likes of insurers and pension funds, by S&P Global Ratings last October and Fitch Ratings in December. Some of Alpha’s ratings are also above the high-grade threshold.
The previous AT1 issue had paved the way for the first dividend payment since the global financial crisis, the bank’s chief financial officer told Bloomberg News at the time. Alpha ended this drought with a cash dividend that was paid last month.
(Updates with final terms in second paragraph and order books in sixth.)
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