LONDON May 15 Britain's Barclays Plc
will issue at least $1 billion of new bonds that can convert
into shares if the bank hits trouble under an offer to debt
investors to exchange old bonds for new securities.
It is the latest move by Barclays to adjust its capital
structure to improve its capital and leverage ratios to meet new
Barclays has said it plans to issue a total of about 7
billion pounds ($11.8 billion) of bonds that would convert into
shares if its core equity ratio falls below a certain level,
which for UK banks has been typically set at 7 percent.
Barclays has so far sold about 2 billion pounds of the
instruments, dubbed contingent capital or "CoCos", and the
exchange offer announced on Thursday will add to that amount.
Barclays said it is offering the holders of some sterling,
euro and dollar denominated bonds the chance to swap into the
new instruments. It will issue a minimum of $1 billion of new
instruments under the terms of the offer, and is likely to issue
slightly more than that amount, depending on the take-up from
There has been a rush of European banks selling CoCos this
year, which are regarding as riskier than normal debt due to the
threat of conversion into shares, but typically pay annual
interest of 6-9 percent.
Bankers predict up to a record 40 billion euros of bonds
could be issued this year, led by the likes of Barclays,
Deutsche Bank and Societe Generale.
The aim is to create an extra layer of protection to prevent
a repeat of the 2007-2009 financial crisis when taxpayers bore
the brunt of bank bailouts.
($1 = 0.5954 British Pounds)
(Reporting by Steve Slater; Editing by Elaine Hardcastle)