Crédit Agricole tenders for Tier 2 amid reorganisation

Crédit Agricole launched a tender offer for up to Eu2bn of euro and sterling high coupon Tier 2 bonds on 14 March.

It is seeking to buy back four series of Tier 2 bonds issued between 2008 and 2010. It is also tendering for up to Eu2bn of covered bonds followed by a consent solicitation aimed at converting the remaining covered bonds to soft bullets.

The four Tier 2 bonds included in the tender offer are: Eu2.364bn 5.971% February 2018 XS0343877451, Eu1.192bn 5.875% June 2019 XS0432092137, Eu1.122bn 3.90% April 2021 XS0550466469, £450m 7.375% December 2023 XS0405953257.

The tender opened on 14 March and expires on 21 March, with the settlement date expected to be on 24 March. The Tier 2 bonds purchased in the context of the Tender Offer will be cancelled immediately following settlement.

Crédit Agricole said the tender offer is part of its plan to optimise its balance sheet through the partial reinvestment of capital gains expected from a simplification of the Crédit Agricole group’s corporate structure planned for this year. It said the tender offer also provides a liquidity opportunity for holders of the bonds.

“For holders of Tier 2 Bonds, the Tender Offer is being made for outstanding high coupon Tier 2 Bonds, some of which are inefficient with respect to prudential requirements,” it said. “The reorganisation of the Group allows for the purchase of these Tier 2 Bonds without any need for new issuances to replace them.

“This will result in a reduction of Crédit Agricole SA’s subordinated indebtedness, while preserving the Group’s favorable position with respect to TLAC requirements.”

Crédit Agricole is global coordinator and joint dealer manager with Citi, Credit Suisse and Morgan Stanley.