Banks want freeze on corporate bond issues

Banks appear reluctant to proceed with new corporate bond issues scheduled by the end of the year due to the outflow of deposits they entail in what is a difficult period given that the capital controls remain in place.

Kathimerini understands that in January-October this year Greek companies raised some 616 million euros via bond issues. This has generated a negative climate in the banking arena, as besides the outflow of capital from the accounts of small investors toward the corporate bond market, several main stakeholders of companies have transferred funds from one bank to another – the latter being the consultant of the corporate issue – to acquire bonds.

All that has upset the balance and competition in the sector and banks are putting significant pressure on the competent stock market authorities for corporate issues to be halted for the time being.

The main reason depositors are turning to corporate bonds is the very low yields of time deposits – their average interest rate has slumped to just 0.5 percent per annum, even for large sums, while the typical interest in corporate bonds ranges between 2.8 and 4.2 percent today. Investors in this category usually spend between 20,000 and 30,000 euros.