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Caixa Geral de Depositos to court investors for AT1 sale
March 16, 2017 / 1:31 PM / 10 months ago

Caixa Geral de Depositos to court investors for AT1 sale

LONDON, March 16 (IFR) - Portugal’s Caixa Geral de Depositos will meet investors from next Monday ahead of a planned Additional Tier 1 transaction, part of a package designed to nurse the state-rescued lender back to health.

Caixa Geral de Depositos confirmed to IFR last month that it had mandated banks for a deal, also the first AT1 trade out of Portugal.

On Thursday it announced investor meetings starting Monday March 20 via Barclays, Caixa - Banco de Investimento, Citigroup, Deutsche Bank and JP Morgan ahead of a €500m no-grow perpetual non-call five.

The trade will gauge the extent to which investors are willing to stomach debt from a low rated peripheral issuer after a period when much stronger credits, such as Intesa, Credit Suisse and Barclays, have dominated AT1 supply.

UniCredit sold a BB- rated €500m AT1 last December but opted for a private placement to mitigate execution risk. Bankinter sold a €200m perp NC5 (Ba3) last April at 8.625%, but only in a €200m size.

Market access for Portuguese banks has been completely untested since 2015, even in a covered format - considered the safest type of bank debt. Though Portugal’s largest bank by assets, CGD is a blind spot for many international investors and posted a net loss of €189m in the first nine months of 2016.

The bond is part of a recapitalisation plan agreed in August last year after months of negotiations with Brussels. The bank plans to issue €1bn in subordinated debt in total.

Portugal’s finance minister said in November that the government planned to inject up to €2.7bn at the time of the first €500m of subordinated debt issuance, with the remaining €500m to be launched up to 18 months later.

The bonds will be written down on a temporary basis should the bank’s Common Equity Tier 1 fall below 5.125%. Its CET1 ratio took a knock last year, slipping to 10.2% on a phased-in basis as of September 2016, from 10.7% in September 2015. (Reporting by Alice Gledhill, editing by Helene Durand, Julian Baker)

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