UniCredit is likely to redeem its €1.25bn 6.625% Perps callable in June as per a Reuters source after it was said to have put in a request to the ECB to redeem it. The lender has until early-May to make a final decision regarding whether to call the bond or not. The source said that redeeming the bond would be a good way to instill confidence in markets which is the case for UniCredit. If UniCredit’s AT1 is not called in June, the coupon will reset to the 5Y Mid-Swap rate plus 638.7bp. Going by current levels, this would imply a new coupon of 9.292%, a jump of 266.7bp from its current coupon of 6.625%. UniCredit’s CET1 ratio stands at 13.4% (as of end-2022), higher than the regulatory threshold of 9.2%.

UniCredit’s EUR 6.625% Perp had fallen to 90 in the aftermath of the Credit Suisse-led impact, but has now recovered to trade at 96. The bonds currently offer a yield to its first call date of June 3 of 29.1%.

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