BME’s AIAF fixed income market today admitted to trading a new issue of Tier 1 preferred securities by Abanca, for an amount of 250 million euros.
The issue has a 7.5% annual coupon and the individual value of each bond is 200,000 euros. These assets qualify as perpetual debt which allows the issuer the option of early amortisation from the fifth year. The placement is aimed at institutional investors while retail investors are expressly excluded.
Barclays Bank PLC, BNP Paribas, Nomura International PLC and UBS Limited have acted as Joint Lead Managers of the issue, while Clifford Chance and Linklaters are the Legal Advisors. The securities have been assigned a B credit rating by Fitch.
With ABANCA four banking entities have already made TIER1 (CoCo's) issues in BME this year: CaixaBank, for 1.25 billion euros in March, Ibercaja in April, for 350 million euros and BBVA in September, for 1 billion euros. Although all the prospectuses registered are in English to facilitate their commercialisation, the governing law is always the Spanish in order to avoid possible problems derived from the final outcome of the Brexit negotiations.
BME thus leverages its position as the reference market for the issuance of these assets that are part of the anti-crisis capital buffer and which meet the requirements established by the European authorities. The aim of these debt issuances is to ensure that in future it will not be necessary to use public money to rescue banks in trouble. According to various estimates, Spanish banking entities will have to issue anti-crisis debt in the coming years for an amount exceeding 60 billion euros.