Nationwide to boost capital with £1bn AT1

Tue Mar 4, 2014 7:00am EST

LONDON, March 4 (IFR) - Nationwide is set to give its capital base a huge boost by raising GBP1bn in the Additional Tier 1.

The UK lender began marketing the perpetual non-call 5.25-year deal on Tuesday morning via Citigroup, Deutsche Bank, RBS and UBS and at the last update said it would price it with a 6.875% coupon.

The Additional Tier 1 is Nationwide's second capital raise since November last year when it priced a £500m Core Capital Deferred Shares (CCDS) issue.

Under the terms of the new deal, the bonds will convert into CCDS if Nationwide's fully-phased Common Equity Tier 1 ratio falls below 7%.

CCDS are similar to equity, being truly perpetual and with distributions that are variable and entirely discretionary.