Piraeus shares fall as rights begin trade in Greece

Shares in Piraeus Bank underperformed the Greek bank sector as rights to an 807 mln euros share offering began trading, as it strives to boost its balance sheet to re-enter interbank market.
Greece's fourth-largest lender is seeking to strengthen its balance sheet with a 12-for-5 share offering at 1.0 euro each to be better able to cope with recession and the country's debt crisis.
"With rights trading at 1.28 euros, the cost of acquiring shares in Piraeus via rights is about 3% lower than the market price. This explains the selling pressure on the stock," said an analyst at a Greek brokerage firm.
Soon after trade began, Piraeus Bank shares were down 3.7% to 1.578 euros, underperforming a 0.84% rise in the Athens bourse's banking index.
"Some investors are selling shares to participate in the cash call via rights," the analyst said. "There is downward pressure on the price of rights as some shareholders do not want to participate.
"This offers an opportunity to investors who want to take part in the capital boost to do it through rights."
Subscriptions to the rights issue began on Monday. Rights, which started trading at 1.51 euros, had moved lower to 1.31 euros. Rights will trade from January 17 to 25. Subscriptions to the rights issue will run from January 17 to 31.
The bank, which got the green light for the cash call by the securities regulator on January 4, began roadshows on January 10.
Managing Director Alex Manos has said Piraeus expects to be better placed to re-enter the interbank market after completion of its underwritten capital hike.
Greek banks have lost access to wholesale funding markets in the wake of the country's debt crisis and have increasingly been relying on the European Central Bank for their liquidity needs.
A one-notch downgrade of Greece's credit rating by Fitch to junk status on Friday had a market-neutral impact as the move had been discounted by the market, traders said.
"The Fitch downgrade ended speculation, the one-notch cut was mild and targeted to be in line with other rating agencies. Overall, the market impact is neutral," said Theodore Krintas, head of wealth management at Attica Bank.
Fitch became the third agency to cut Greek debt to junk, highlighting persisting doubts over the country's ability to pull itself out of a severe debt crisis that has shaken the euro zone.
Piraeus Bank's rights offering is underwritten by Barclays Capital, Credit Suisse, Goldman Sachs and Morgan Stanley, which will act as global coordinators and lead managers.
ING Bank, Keefe, Bruyette & Woods, Macquarie Capital, Mediobanca and MPS Capital Services are co-lead managers.