Cor­po­rate bonds at­tract mat­tress cash

Kathimerini English - - Focus - YIAN­NIS PAPADOYIANNIS

Ove the last few months sev­eral ma­jor en­ter­prises in Greece have drawn about 1 bil­lion eu­ros through the sale of cor­po­rate bonds and a large part of that was cov­ered by money from mat­tresses and safe de­posit boxes, ac­cord­ing to credit sec­tor sources.

The hidden stock of cash is es­ti­mated at tens of bil­lions of eu­ros. In the last big wave of de­posit with­drawals, from late 2014 up to the im­po­si­tion of the cap­i­tal con­trols in mid-2015, about 40 bil­lion eu­ros ex­ited the bank­ing sys­tem. A con­sid­er­able amount of that is es­ti­mated to re­main in cash form while another por­tion has been in­vested in mu­tual funds abroad.

The cli­mate in the mar­ket started im­prov­ing in mid-April, when Athens ap­peared ready to com­pro­mise with its cred­i­tors so that the bailout re­view would be com­pleted. Cor­po­rate bonds were seen as a good al­ter­na­tive to make the most of cash with­out re­turn­ing it to the banks.

Cor­po­rate bonds of­fer good re­turns, top­ping 3 per­cent – while de­posit in­ter­est rates are at his­toric lows – and are im­mune to bank risks such as the cap­i­tal con­trols and a pos­si­ble bail-in. Of course the course and re­pay­ment of cor­po­rate bonds de­pend on the state and progress of the com­pa­nies that is­sued them, so they have their own risks too.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.