With the coming transaction, BBVA is set to become the first European bank to sell Additional Tier 1 bonds that comply with the new Capital Requirements Regulation of the region. This first one can possibly kick start many other deals that can be undertaken in order to improve capital ratios of the many participating banks.
Based out of Spain, BBVA has reported a 72.6% rise in the first quarter profit last Friday. The bookrunners of the bond issue are Bank of America Merrill Lyncy, UBS, Goldman Sachs and BBVA. The banks are also joint bookrunners for the AT1 bond, which could hit the market as early as next week.
The marketing for the perpetual Reg S deal would begin on Monday and would hold investor meetings in Asia, the United Kingdom and Switzerland.
Analysts predict that the bond issue would be of benchmark size or about US$500 million. It also has an existing equity conversion structure at 7% of value.
According to analysts at Mizuho, BBVA has a CT1 capital ratio at 11.2% giving investors a 420 basis points buffer over the 7% conversion trigger level.
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