The National Bank of Greece has taken the unique step of offering to buy back €1.5bn of its investors’ covered bonds at a substantial 30% discount, testing investors’ faith in the normally safe covered bond market.

Bank covered bonds are considered the safest type of bond, offering the highest level of protection to investors in the event of bankruptcy. In a buyback scenario, banks typically pay investors the initial issue price but bankers working on the deal say that this is the first time the buyback price is substantially lower.