Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Banco Santander raised $1bn via a non-cumulative Perpetual non-call 6Y (PerpNC6) preferred Tier 1s at a yield of 4.75%, 25bp inside initial guidance of 5% area. The issuance has expected ratings of Ba1 and are callable from (including) November 12, 2026 to (including) the first reset date of May 12, 2027 and each interest payment date thereafter. The coupons are fixed until the reset date and if not called on May 12, 2027, the coupon resets to the 5Y Constant Maturity Treasury rate + initial margin of 375.3bp. A trigger event would occur if the CET1 ratio falls below 5.125% (current CET1 12.3%). There is no coupon step-up.

Santander also raised €750mn ($905mn) via non-cumulative preferred PerpNC7 AT1s at a yield of 4.125%, a massive 87.5bp inside initial guidance of 5% area. The bonds have expected ratings of Ba1. The bonds are callable from (including) November 12, 2027 to (including) the first reset date of May 12 2028 and each interest payment date thereafter. The coupons are fixed until the reset date and if not called on May 12, 2028, the coupon resets to the 5Y Mid-Swaps rate + initial margin of 431.1bp. A trigger event would occur if the CET1 ratio falls below 5.125%.There is no coupon step-up. Proceeds will be used for general corporate purposes. The issuance comes just a day after Deutsche Bank raised via a PerpNC7 AT1 at 4.625%, with a 62.5bp tightening.

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