The improvement in Greece’s economy is starting to filter down to the corporate level, with upgrades from S&P that the market has yet to price in. The most notable, perhaps, is with the investment-grade rating carried by National Bank of Greece’s covered bond program.

The bank’s October 2020 covered bond offers a yield of 1.5%, compared with an average 0.243% for three-year BBB- rated covered issues and next to nothing for two-year BBB- debt.

One reason for the gap is the limited investor base. The bank requires another IG rating to enter major covered bond indexes and lure passive money and investors who track benchmarks.

 

As ABN Amro strategist Joost Beaumont tells me, the S&P upgrade is rekindling interest in Greek corporate debt after year’s of being off the radar of many high-grade investors.

 

It’s still in the test phase.