NEW YORK, Sept 2 (IFR) - Nordea, Sweden’s largest bank, looks set to launch the first Tier 1 Coco from the country, breaking the ice for a slew of Swedish capital deals.
The issuer has mandated Bank of America Merrill Lynch, Citigroup, Goldman Sachs and UBS to lead manage a dollar denominated transaction, according to market sources, and the transaction could emerge in the near future.
Sweden is one of the very last European jurisdictions to get the go-ahead to issue Additional Tier 1, also called CoCos.
One of the main sticking points between Swedish banks and the regulator has been how low a bank’s common equity can go as a percentage of risk weighted assets before the loss absorption features in the CoCos are triggered.
It is believed the transaction will have an 8% Common Equity Tier 1 (CET1) trigger for loss absorption, making it the highest in Europe.
Although that’s higher than any other jurisdiction, with the UK next at 7%, Swedish banks are highly capitalized.
Nordea’s CET1 capital ratio is 15.2% (editing by Shankar Ramakrishnan)