Greek banks, once seen as the most dangerous investment in the euro zone, have been on a tear of late.
They have been bolstered by a large injection of fresh cash from Europe and have raised billions of dollars in global bond and equity markets. Their top executives, with eager investment bankers and publicists in tow, have become a regular presence in investment capitals everywhere.
The message has been loud and clear: Greece’s economy is recovering and, with the country more or less meeting the reform targets set by its creditors, the banks are set to thrive.
For the many who struck it rich by buying Greek government bonds — and for the many more who sat on the sidelines as the bonds soared in value last year — the pitch, made most recently by National Bank of Greece at a roadshow in New York last week, has been a compelling one.
But amid the euphoria, some analysts have expressed caution.
After all, as a recent stress test undertaken by BlackRock makes clear, nonperforming loans — at close to 40 percent of total credit outstanding — pose a daunting challenge, regardless of how much new cash banks now have on hand.
Perhaps the clearest sign that the finances of Greek banks are more precarious than they may seem has been the record number of government-guaranteed bonds that the banks issued last year — about 40 billion euros, or 22 percent of bank deposits in the country.
Issued by the banks to themselves, the bonds, which tend to have a maturity of about a year, are used as collateral to access short-term funds from the European Central Bank.
Traditionally, banks collect the funds they need to make loans by attracting deposits and short-term term credit lines from bond investors and other banks.
But with Greeks having brought home just a small proportion of the many billions of euros they sent abroad during the euro crisis and with bad loans still a problem, the country’s banks remain more or less dependent on the European Central Bank for their survival.
That does not mean that Frankfurt, which now has direct supervision over euro zone financial institutions, has embraced the practice; the bank said last year that it would no longer accept such instruments in 2015.
Greek bank executives say that that there is no need to worry about this bond explosion and that it reflects a logical move by the country’s financial sector to access more liquidity.
A spokesman for the European Central Bank declined to comment.
Still, in a world of mysterious debt instruments, these bonds have struck some experts as particularly exotic.
They do not trade, although they are listed on the London stock exchange and some are rated by credit agencies. The banks pay and receive interest on the bonds they issue, and the bonds command interest rates that are much higher than market rates.
For example, Piraeus Bank, Greece’s second-largest bank by assets, issued €1.75 billion of bonds at over 12 percent interest one month before it sold €500 million in three-year bonds to foreign investors at a rate of 5 percent.
“That is just a ridiculously high yield,” said Mitu Gulati, a sovereign bond specialist at Duke University Law School.
Mr. Gulati highlighted this trend in a recent paper on government-guaranteed bonds in the euro zone.
And after digging through countless bond contracts, he remains perplexed by the high rates on the bonds.
“It just does not make any sense to me,” he said.