Hybrids in the news

Credit Suisse Said to Plan Sale of Contingent Note in Francs

Credit Suisse  is planning a sale of contingent capital notes in Swiss francs meeting regulators’ demands that banks strengthen their protection against losses.

Swiss Re CFO sees opportunity, risk in hybrid debt

Fitch assigns UBS AG's tier 2 subordinated notes final 'BBB-' rating

Fitch Ratings has assigned UBS AG's (UBS) USD2bn Tier 2 contingent subordinated notes (ISIN XS0747231362) a final rating of 'BBB-'.

UBS May Sell Contingent Capital Two to Three Times a Year

UBS AG, Switzerland’s biggest bank, may sell contingent capital bonds two to three times a year to satisfy regulatory requirements early, Chief Financial Officer Tom Naratil said.

UBS Contingent Note Will Be One of Many in Switzerland

Fitch believes UBS and Credit Suisse may issue around CHF35bn to CHF40bn of low-trigger contingent capital until 2019 in line with steadily increasing capital requirements. It is likely that much of this will be issued in the next two to three years rather than towards the end of the implementation period.Fitch notches Tier 2 contingent capital ratings down three or four subcategories from a bank’s viability rating, depending on the cushion between a bank’s capital level and the level at which the notes are converted into equity or written down, as well as the volatility of the bank’s earnings and its ability to manage risk-weighted assets.

UBS’s $2 Billion of Contingent Capital Notes Tumble After Sale

“They were priced for retail, rather than the institutional market where most investors seem to have thought them very tight,” said John Raymond, an analyst at research firm CreditSights Inc. in London. “It seems to be partly because of the big Moody’s review.” The ratings firm is reviewing 17 banks and securities firms which have global capital markets operations. Capital markets businesses “are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” Moody’s said. UBS spokeswoman Stephanie Aneto declined to comment on the performance of the securities.

UBS Contingent Capital Notes Said to Yield About 7.5%

UBS AG (UBSN)’s sale of contingent capital notes in dollars may be priced to yield about 7.5 percent, according to a banker involved in the transaction.

UBS opens books for first low-trigger CoCo issue

The first European Tier 2 deal where bondholders could lose all principal via permanent write-down rather than the notes converting into equity could price on Wednesday after UBS opened books for the contingent capital issue.

Basel DVA proposals could subtract billions from bank capital.

Counter Cyclical Uncertainty

Bond managers play ‘massive recovery’ in bank debt.

Greece's National Bank Increases Core Tier 1 by $383 Million

National Bank of Greece SA, the country's largest lender, increased its core Tier 1 capital by approximately 302 million euros ($383 million) after repurchasing bonds and hybrid securities.

Meeting the EBA 9% CET1 Target

EBA says that most (26%) of the required capital will be new money raised by selling shares, borrowing from the markets or using up retained earnings (profits that have not been used up paying dividends) from 2011. Converting hybrid instruments - such as buying back preference shares from the government - will make up 22% of the new capital raised, while 16% is being allocated from projected retained earnings for 2012. A further 6% will be raised by issuing continent convertible bonds (known as CoCos, which can be converted to shares based on a pre-set trigger, for example, if share prices collapse) and 7% through “other measures," including the sale of non-core assets.

UBS' CoCo to be permanent write-down litmus test

UBS has begun marketing a contingent capital bond which could offer an important template and pricing point for future loss-absorbing Tier 2 capital issuance for non-Swiss European banks which many have argued will be difficult to sell. The 10 yr Bond will have full write down when the 5% CET Trigger is hit.

UBS CFO: Bank Planning to Sell Contingent Capital

CFO Tom Naratil said that the bank prefers "non-dilutive" contingent capital, meaning it will likely not go the way of Credit Suisse Group AG, which issued bonds that convert into shares when capital drops beneath a certain level.

UniCredit buys back €1.86bn of sub debt

UBS sets sights on low trigger CoCo bond

UBS plans to sell the first low trigger contingent capital (CoCo) trade from Switzerland as soon as next week having announced a series of investors roadshows in Asia and Europe to introduce the structure to investors.

Nordea resurrects LT2 callable market

The European callable Lower Tier 2 market, which had not seen a fresh bank issue since 2008, sprang back to life this week when Nordea Bank priced a heavily oversubscribed deal.

Banco Popolare set to launch hybrid bond buyback

A Blueprint for Contingent Convertible Securities?

Lloyds Banking Group PLC : Lloyds TSB Bank Plans Hybrid Bond Exchange Offer

Spain Gives Banks That Merge Two Years to Clean Up Real Estate

Spain will give struggling banks more time to take their share of 50 billion euros ($65.7 billion) in real estate charges if they agree to merge with other lenders. Banks will have until the end of May to present merger plans that will mean they get two years instead of one to make additional provisions for real estate piled up on their balance sheets. Banks that agree to merge will be able to tap Spain’s FROB bank-bailout fund by selling contingent convertible bonds to the facility, de Guindos said, adding the steps won’t affect the country’s budget deficit. The bonds, known as CoCos, convert into equity if capital ratios fall below a certain level.