National set to mandate short-dated covered bond

National Bank of Greece (NBG) is close to mandating a 300-million-to-500-million-euro three-year covered bond, according to sources familiar with the matter, which would be the first Greek bank bond sold since 2014.

The market has been on the lookout for Greek bank issuance ever since the sovereign sold its first euro benchmark in three years, a 3-billion-euro issue with 4.37 percent maturing in August 2022 at a 4.625 percent yield, in late July.

The country's banking sector is desperate to wean itself off the costly emergency liquidity assistance (ELA) on which it has been dependent since 2015.

A covered bond transaction - the safest and cheapest form of bank debt - would be a natural route for an issuer to regain market access and help normalize its funding profile.

The format would give bondholders additional comfort, particularly after they were asked to...