Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) of Athens headquartered Piraeus Bank to CCC+ from CCC based on improving asset quality and capital encumbrances from unreserved impaired loans. The long-term senior preferred debt rating has also been upgraded to CCC- from CC. While Piraeus’s impaired ratio at 45.3% was the highest among the major Greek banks, it was expected to fall to ~35% by 2Q21 after impaired loan disposals of ~€6.7bn ($8.14bn) under the Hellenic Asset Protection Scheme (HAOS) and simultaneous planned capital-enhancement actions. To improve its capital base, the Greek financial services company has already raised €1.3bn ($1.58bn) through equity and plans the sale of its cards merchant-acquiring business and issuance of ~ €600mn ($730mn) of AT1 bonds. The bank’s common equity Tier 1 (CET1) ratio is expected to remain at ~13.8%, achieved at the end 2020. The bank is also likely to gain from the recovery of the Greek economy. According to the rating agency, “Piraeus’s ratings largely reflect the bank’s weak, albeit improved, asset quality and very high capital encumbrance by unreserved impaired loans, but also our expectation that significant de-risking is underway.”
Piraeus’s 9.75% 2029s and 5.5% 2030s yielding 6.46% and 6.81% were down 0.37 and 0.27 to trade at 109 and 95.7 respectively on the secondary market.
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