Tuesday, 17 February 2015

Aid Talks Breakdown Deepens Exit Risk

Dutch Finance Minister Jeroen Dijsselbloem
Dutch Finance Minister Jeroen Dijsselbloem. Ministers may reconvene Friday for 
more talks, Dijsselbloem, who also heads the finance ministers’ group, said. 
Photographer: Jasper Juinen/Bloomberg

by Katie Linsell |2:50 AM PST | February 17, 2015

(Bloomberg) -- Greece’s bank bonds fell as the breakdown of talks with euro-area finance ministers on a bailout deal deepened concern the nation will exit the currency union.

National Bank of Greece SA’s 750 million euros ($853 million) of 4.375 percent notes due April 2019 fell 3 cents on the euro to 62.6 cents, the lowest in almost a week, to yield 17.7 percent, according to data compiled by Bloomberg. Piraeus Bank SA’s 500 million euros of 5 percent bonds due March 2017 dropped 3.1 cents on the euro to 70.7 cents, also the lowest in almost a week, yielding 24.5 percent.

The risk of Greece leaving the euro was raised to 50 percent by Commerzbank AG after the aid talks in Brussels ended abruptly Monday. Greece and its European creditors have failed to reach an agreement on how to proceed with its bailout program, which runs out at the end of February.

“There’s very little chance the Greek banks would be able to stay afloat if Greece were to exit the euro zone or if it restructured,” said Paul Smillie, a Singapore-based analyst at Threadneedle Asset Management, which oversees about $150 billion. “The market is weaker but there isn’t a general selloff or panic.”

Ministers may reconvene Friday for more talks, Dutch Finance Minister Jeroen Dijsselbloem, who also heads the finance ministers’ group, said.

Securities from non-financial Greek companies also fell, with the 500 million euros of 5.5 percent bonds sold by Public Power Corp., the nation’s biggest electricity provider, dropping 3.3 cents on the euro to 72.9 cents, the lowest since Feb. 12. Hellenic Telecommunications Organization SA’s 3.5 percent bonds slid 2.1 cents on the euro to 89.7 cents.

To contact the reporter on this story: Katie Linsell in Madrid at klinsell@bloomberg.net

To contact the editors responsible for this story: Shelley Smith atssmith118@bloomberg.net Mark McCord