National Bank of Greece : S&P Cuts Counterparty and Unsecured Debt Ratings on National Bank of Greece
11/06/2015
Standard & Poor"s Ratings Services said that it lowered its long-term counterparty credit rating on National Bank of Greece S.A. (NYSE: NBG) to "D" from "SD".
We also lowered our issue ratings on the bank"s senior unsecured debt to "D" from "CCC-" and our subordinated debt ratings to "D" from "C".
The downgrades follow NBG"s launch on Nov. 2 of a tender offer to exchange securities from holders of its Tier 1 (T1) debt, Tier 2 debt, and senior debt instruments with equity. This constitutes a "distressed exchange" under our criteria because it implies that investors will receive less value than the promise of the original securities. This is because the issuer offers to exchange the securities for an instrument of lower ranking in the issuer"s capital structure. Additionally, we think the offer is not purely opportunistic, according to our criteria, given the financial position of the bank.
Therefore, following the launch of the offer, and taking into account the capital controls which are still in place in Greece, we consider that NBG is in default on most of its on-balance-sheet financial obligations, according to our methodology. Combined, the securities subject to the offer amount to approximately 802.5 million.
The offer also includes the following rated instrument:
18.3 million of outstanding of Tier 2 notes (ISIN XS0527011554).
The offer is being conducted in two phases. First, on Nov. 2, 2015, the bank offered to exchange the securities with cash to be deposited in a special account for the bank"s share capital increase. We understand the offer will expire on Nov. 11, 2015. In the second phase, special deposit holders will receive new shares issued by the bank.
NBG is offering 100% of the nominal value for senior notes, 75% for the subordinated debt, and 30% for outstanding preferred securities.
