By Aimee Donnellan and Philip Wright
LONDON, Feb 27 (IFR) - Nationwide Building Society is
considering issuing the first sterling-denominated Additional
Tier 1 bond, having hired a group of banks to manage an investor
roadshow ahead of the possible transaction, said one of the lead
managers on Thursday.
Citigroup, Deutsche Bank, RBS and UBS are arranging the
meetings, which will take place in the United Kingdom from
Friday, February 28.
Additional Tier 1 is a form of loss-absorbing capital that
can be written down or converted into equity if a bank runs into
While Nationwide, as a mutual, has no equity into which the
bonds can convert, it did present the market with a new product
last November - Core Capital Deferred Shares (CCDS). And it is
into these that the new bonds would convert in the case of
Nationwide's CET1 ratio breaching 7%, said a banker involved in
CCDS are similar to equity, being truly perpetual and with
distributions that are variable and entirely discretionary.
November's GBP500m offering attracted orders of GBP1.6bn and
traded up to around 107 from its par issue price within days of
being sold. One banker today said it was now quoted around 120.
Also of interest to a number of potential issuers waiting in
the wings is that this will be the first AT1 transaction from an
unlisted entity and therefore something that could provide them
with a template, said the banker.
He also stressed the importance of opening up a third
currency for issuance of the asset class, away from the euros
and US dollars that have been seen before. While there is
currently a large degree of crossover in terms of investors
across currencies, he sees the sector deepening and more
accounts getting involved.