Deutsche Bank to of­fer bonds as cap­i­tal woes dip

The Pak Banker - - COMPANIES/BOSS -

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.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.