Santander attracts more than EUR13bn of demand for inaugural AT1

Wed Mar 5, 2014 4:30am EST

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LONDON, March 5 (IFR) - Banco Santander has attracted in excess of EUR13bn of demand for an inaugural Additional Tier 1 issue as the market for high-risk loss absorbing bank bonds hots up.

The Spanish bank began marketing the perpetual non-call five-year deal on Wednesday morning with initial price thoughts of mid to high 6%, but this has been revised tighter to 6.25%-6.5% on the back of the overwhelming demand. The transaction will price within that range, and books will go subject at 9:30am UK time.

The bank is rated Baa1/BBB/BBB+ by Moody's/S&P/Fitch, with the notes expected to be Ba2 by Moody's. The bond will convert into shares if the bank's Common Equity Tier 1 (CET1) ratio falls below 5.125% at the bank or group level.

As of the end of 2013, Santander's CET1 ratio stood at 10.45% at the group and 12.26% at the bank level.

The lead managers are Bank of America Merrill Lynch, Citigroup, Santander and UBS. (Reporting by Helene Durand, editing by Julian Baker)