Het lijkt een trend te worden. Dus ja, who's next..
18:46 17Nov11 -FIG WRAP: Scramble for Core Tier 1 intensifies
LONDON, Nov 17 (IFR) - Four more financial institutions joined the
liability management fray on Thursday as the rush to improve Core Tier 1
intensified.
SNS Bank, BNP Paribas, Northern Rock Asset Management (NRAM) and
Bradford & Bingley all announced their intention to buy-back some of their
subordinated debt stock at a discount to par, citing capital position
improvement as the rationale. They followed the announcement by BES earlier
on this week.
Market participants expect the flow of liability management to continue
as banks do everything they can to avoid going to the equity market to
boost their capital base.
"I think this is all about the banks trying to get ahead of what the
EBA is going to ask them to raise," said a senior lawyer. "The last thing
banks want to do right now is to issue equity at the current depressed
prices. If they can deleverage, not pay coupons on hybrids, cut dividends,
do liability management, then they'll do it. The amount of capital that
needs to be raised is not huge and when they have a choice, banks will seek
alternatives away from the equity markets."
A credit analyst echoed his view. "The banks are taking advantage of
the current prices and being a bit more aggressive than they have been in
the past," he said. "There is going to be a huge amount of focus on core
Tier 1 next year and liability management is a good way of getting banks
there. Also, banks are facing a lot of calls and this is a way of tackling
those, especially if they think regulators won't allow them to call deals
going forward."
A banker estimated the stock of step-up deals callable in the next 12
to 18 months was around EUR85bn, with a heavy skew towards UK, France,
Spain and Italy. "For some banks, it can be a good exercise in investor
relations, although for some, they seem to have gone in a little too
aggressively."
SNS Bank announced on Thursday morning that it was seeking to buy back
two outstanding lower tier 2 issues at a discount to par, seeking to boost
its core Tier 1 capital. SNS is targeting a EUR500m 6.25% bullet issue
maturing in October 2020 and a EUR195.8m 6.625% bullet issue maturing in
May 2018 for exchange into a new senior five-year euro deal with an
expected maturity of November 30 2016. The yield has been set at five-year
mid-swaps plus 450bp.
SNS is buying the lower tier 2 bonds back at 73 and 80 for the 2020 and
2018 respectively. The bonds were trading around 58/60 and 64/66
respectively. UBS is dealer manager, SNS is co-dealer.
SNS Reaal still needs to pay back EUR565m of state aid, plus a 50
percent premium, as well as EUR435m of aid from a foundation which also
owns half of SNS Reaal's ordinary shares.