Barclays Markets Risky AT1 Bonds, Following Other European Banks
15 Novembro 2023 - 3:03PM
Dow Jones News
By Miriam Mukuru
Barclays said it is marketing Additional Tier 1 bonds, a risky
form of debt which offer high yields, making it the third major
European bank to issue such bonds in the last week.
Initial price talk for the bonds is at 10.5%, with a call
period--the time until the bonds can be redeemed--in six years'
time, the bank said Wednesday.
AT1 bonds are risky debt created after the global financial
crisis which act as safety buffers if a bank's capital levels fall
below a certain threshold. They can be converted into equity or
written down if the bank runs into trouble.
Last week, UBS and Societe Generale both issued AT1 bonds.
In UBS's case, this was the first AT1 bond since it took over
Credit Suisse. Credit Suisse's AT1 bonds were completely written
down in March as part of the rescue and acquisition by UBS, scaring
investors away from AT1 markets.
Barclays confirmed the bonds are convertible into shares upon
any "trigger event."
Barclays' AT1 bonds will be redeemable on the first call period
from Dec. 15, 2029 to June 15, 2030, Barclays said.
Interest payments on the bonds will be quarterly in arrears,
starting from March 15, 2024, it said.
Interest payments are "fully discretionary, may be cancelled in
whole or in part, and are non-cumulative," the bank said.
So far, only one bank has skipped coupon payments in the history
of AT1 bonds, CreditSights said in a note.
"In June 2017, [Bremer Landesbank] announced it would not be
paying coupons on its two euro AT1s, reflecting insufficent ADI
(Available Distributable Items)," CreditSights said.
Bloomberg reported that Barclays has seen more than $5 billion
of investor demand for these bonds so far.
Write to Miriam Mukuru at miriam.mukuru@wsj.com
(END) Dow Jones Newswires
November 15, 2023 12:48 ET (17:48 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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