Deutsche Bank to offer bonds as capital woes dip
Deutsche Bank AG, whose debt plunged last month, is back in the market selling bonds. The lender is offering three-year senior unsecured notes in euros, according to a person familiar with the matter, who asked not to be identified because they aren't authorized to disclose the information. Banco Santander, Royal Bank of Scotland Group Plc and ING Bank NA are also marketing bonds, according to separate people familiar with the sales.
Appetite for European lenders' bonds has rebounded, with UBS Group AG able to complete the first sale of the riskiest type of bank debt in Europe for two months on Monday. Deutsche Bank, which was at the center of a February selloff, has reassured investors about its capital levels by buying back debt.
"The market is starting to get back on its feet," said Eric Cherpion, head of global bond syndicate at Societe Generale. Still, more offers for the riskiest type of bank bonds won't come without "further performance in secondary markets first," he said.
UBS sold $1.5 billion of so-called additional Tier 1 notes on Monday. The bonds are the first to absorb losses if a bank runs into trouble.
Moody's Investors Service is expected to rate Deutsche Bank's notes Baa1, the third-low- est investment grade, according to the person familiar with the matter. A spokesman for the Frankfurt-based lender declined to comment on the bond sale.
Deutsche Bank acted to allay investors' concerns following its first annual loss since 2008 and a report by CreditSights that said a capital squeeze could prevent coupon payments on additional Tier 1 notes next year. The lender rebuffed the research company's report, with Co-Chief Executive Officer John Cryan saying the bank was "rock solid."
The German lender's shares and bonds have rallied since the debt buyback was announced last month, and the the cost of insuring its senior debt against default has fallen more than 40 percent, according to data compiled by Bloomberg. Still, the stock remains down 19 percent this year, compared with an 14 percent decline for Stoxx 600 Banks Index.
RBS is offering seven-year notes in euros, while Santander is marketing 10-year subordinated Tier 2 bonds in the single currency, according to the people familiar with the sales. ING's sale comprises three- and five-year dollar notes, the person familiar said.
Spokesmen at RBS and ING declined to comment on the bond sales. A spokesman for Santander confirmed that the bank was selling Tier 2 notes.