SNS Reaal insurance hybrid drops on missed coupon news

Thu Mar 28, 2013 5:13am EDT

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LONDON, March 28 (IFR) - A hybrid bond issued by SRLEV, the insurance arm of SNS Reaal, fell 10 points in cash terms on Thursday after the issuer was forced by the European Commission to halt a coupon payment on the bond.

The move follows the nationalisation of the Dutch banking and insurance group in February.

The 9% EUR400m bond maturing in 2041 was bid at 88 by 0900GMT. The bond was issued in April 2011 and the coupon payment is due on April 15, next month, but the issuer has been barred from paying the coupon by the EC under its rules of state aid.

"The coupon is cumulative and deferred amounts bear interest at 9%, but holders will be focussed on when they might actually get their cash," analysts at Mizuho said.

Another bank hybrid specialist said the move was unexpected, particularly because the insurance arm of the business was considered healthy.

"The coupons are cumulative so will have to be caught up at a later date. The decision does not strike me as justified or beneficial," said the banker. (Reporting by Natalie Harrison and Josie Cox, IFR Markets; editing by Anil Mayre)

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