In brief: Bendigo in regional first, and more

Bendigo & Adelaide Bank launched an A$300m Tier 2 at BBSW+280bp on 21 January. The transaction was 2.5 times oversubscribed, with more than 35 investors participating, marking the first institutional offering of a Basel-III compliant subordinated bond from an Australian bank. The notes, which include a non-viability clause in accordance with APRA’s regulations, were rated Baa2 by Moody’s, BBB by S&P, and BBB+ by Fitch.

Santander Mexico prints first Latam Basel III Tier 2: On 18 December, Santander’s Mexican subsidiary issued the first Basel III-compliant Tier 2 bond from Latin America. The US$1.3bn 10NC5 subordinated notes were priced at 460bp over US Treasuries, at a yield of 6.125%.

Maybank issues Basel III-compliant Tier 2: Maybank, Malaysia’s largest bank by assets, issued Basel III-compliant MYR1.6bn (US$479.76m) 10 year Tier 2 notes on 27 January. The bond carries a 4.9% coupon.

Dah Sing Bank, Bank of Jinzhou issue Basel III-compliant Tier 2s: Hong Kong-based Dah Sing Bank issued $225m 10NC5 Basel III-compliant Tier 2 notes at 375bp over Treasuries on 22 January. The notes carry a fixed coupon of 5.25% up to the call date, with a reset thereafter. The bond contains a contractual point of non-viability clause, based on which it could be written down in full or in part if the Hong Kong Monetary Authority considers this step necessary to maintain the bank’s viability. The final book was US$1.9bn, with 111 accounts. In terms of allocation, 29% of the transaction went to private banks, 19% to banks and 9% to insurance companies. By investor type, 88% of the notes were placed with investors in Asia and 12% in Europe.

Bank of Jinzhou followed suit on 24 January with a CNY1.5bn (US$248m) 10NC5 Tier 2 at a yield of 7%. It is the second bank from mainland China to issue a Basel III-compliant bond.

RBS announces results of tender offer: Royal Bank of Scotland announced on 16 January the results of the any-and-all tender offer on six Australian dollar, euro and US dollar Tier 2 bonds, with first call dates in 2012 and 2013. The exercise achieved a 70.25% acceptance rate.

On 16 December RBS completed the issuance of a new 10 year bullet US$2bn Tier 2, priced at 325bp over US Treasuries. The bond carries a coupon of 6.0%.

Royal Bank of Canada launches debut Basel III-compliant Canadian Tier 1: Royal Bank of Canada announced on 21 January a domestic public offering of C$200m Perpetual Reset Preferred Shares. The notes carry a deferrable non-cumulative quarterly fixed dividend at a 4% yield until the first call date in May 2014. Thereafter, the dividend rate will reset every five years at a rate equal to 2.21% over the five year Government of Canada bond yield.

The notes, which will count as Tier 1 capital, contain a contractual point of non-viability clause, based on which the bond would be automatically converted into common equity if determined by the Canadian regulator. The issue has been rated Baa3 (hyb) by Moody’s, four notches below the adjusted BCA.

Gazprombank announces consent results: Gazprombank announced on 17 January the success of a consent solicitation on its outstanding PerpNC2018 US$1bn 7.875% Tier 2, formerly structured to meet the then-current Standard & Poor’s RAC requirements.

The accepted amendments will move the first call date to year 10 to capture the grandfathering treatment as legacy Tier 1, and insert a contractual loss absorption mechanism to allow the grandfathered part to be treated as new Basel III Tier 2.

Sberbank starts roadshow for USD T2 transaction: Russian lender Sberbank on 10 February started a series of investor meetings across Europe and the US. The issuance of a Reg S/144A US dollar Tier 2 Loan Participation Note should follow, subject to market conditions.

Cattolica Assicurazioni brings new Eu100m 30NC10 T2: Italian insurer Cattolica Assicurazioni issued new Eu100m 7.25% 30NC10 Tier 2 Notes on 12 December in order to finance the acquisition of FATA Assicurazioni.

Citi announces tender offer on EUR and GBP sub notes: On 3 February, Citigroup announced a tender offer under the Modified Dutch Auction format on its outstanding Eu1.25bn 4.25% 2030NC2025 and £500m 4.5% 2031 subordinated notes, for up to US$285m equivalent.