Greek bond issuers hit with trading suspension

(Adds quotes, context)

By Alice Gledhill

LONDON, June 30 (IFR) - Trading in seven Greek issuers' debt was halted on Tuesday morning, including bonds from the sovereign itself and its four major banks, delivering another punch in the stomach for the stricken country.

While stock trading suspension is far from unusual, it is much rarer for bonds from companies, let alone their governments, to be impacted in such a broad way.

The suspension in London and Luxembourg came at the request of the Hellenic Capital Market Commission (HCMC) and follows the Greek government's decision at the end of last week to call a referendum.

"This happens very, very rarely," one debt syndicate banker said. "The last time I remember something like this was when SNS went bust and the regulator expropriated the subordinated debt and no one knew whether they would be able to settle trading in the bonds or not."

Trading of all bonds issued by the sovereign, the country's four major banks - Alpha Bank (Other OTC: ALBWF - news) , Eurobank, National Bank (NYSE: NBHC - news) of Greece and Piraeus Bank - Hellenic Railways, and National Bank of Greece Funding has now halted.

The Greek government has urged voters to reject the bailout in Sunday's referendum. Banks have been forced to close, pushing the country - and broader markets - into further turmoil.

"It doesn't look too pretty out there," said a debt banker.

"The trading suspension is probably a good thing. It feels like people are quite unprepared and that we took everything for granted. I think most people thought it would have been sorted by now but clearly, that's not the case."

RARE EVENT

A Luxembourg stock exchange official said he could not remember the last time the stock exchange was asked to impose such a suspension.

"It would have been a while ago," he said. "The one I can remember was a request for Banco Espirito Santo [in 2014] when we were asked to suspend trading in shares and bonds."

Greek officials have said the government will not make a EUR1.6bn repayment to the IMF on Tuesday, meaning the country will fall "into arrears" - the official euphemism for default.

It will be the first time an advanced economy has defaulted on a loan from the world's financial backstop.

Meanwhile trading platform Tradeweb has announced that it has blocked a number of Greek government bonds and other Greek securities following a notification from the UK Financial Conduct Authority received on Monday.

Prior to the suspension, Greek debt yields had been rocketing as the crisis escalated.

Alpha Bank's June 2017 bonds were last bid at a yield of 62.45%, having spiked from 26.33% on Friday, while Piraeus March 2017s were bid at 79.62%, up from 36.44%. Their cash prices fell to 42.21 and 40.86, from 67.90 and 63.81 respectively.

Greece's 3.375% July 2017 government bond was last yielding 39.33%, according to Tradeweb prices, having closed at 21.2% on Friday. Its cash price was 55.37, down from 72.73.

Fitch downgraded the four banks' long-term issuer default ratings to restricted default (RD) on Monday following the announcement of extended bank holidays and capital controls. (Reporting by Alice Gledhill, editing by Helene Durand, Julian Baker)