LONDON, Feb 13 (IFR) - Raiffeisen Bank International has
been swamped with over EUR2.25bn of orders for a new
subordinated bond, suggesting the Austrian banking sector
remains well insulated from the problems at Hypo Alpe Adria
The Austrian government has been looking for a wind-down
solution for HAA over the past week, with plans for getting
private banks to back a bad bank solution now looking less
The government is now looking at the possible creation of a
run-off entity owned by the state instead. Luckily for RBI and
others, this has had almost no impact on the CDS or bond levels
of the country's banks.
"A number of investors expressed concerns about HAA on the
call yesterday but they know that just because there's one bad
apple doesn't mean the whole banking system is rotten," said a
banker at one of the lead managers - Bank of America Merrill
Lynch, BNP Paribas, Citi and RBI.
RBI doubled its capital base with a EUR2.78bn equity raise
in January, helping shore up its balance sheet and bringing it a
step closer to repaying its state aid before the 2017 deadline.
But the bank, like many Austrian institutions, has some
legacy issues, and in September raised its forecast for bad loan
provisions, prompting concerns about its emerging markets
Peers, including Erste Group Bank and UniCredit Bank
Austria, have also had to boost bad loan provisions as economies
in Central and Eastern Europe suffer.
RBI, emerging Europe's second-biggest lender, began testing
interest for the 11 NC6 bond at mid-swaps plus 350bp area,
revising that to 340bp area as orders topped EUR2bn.
The Austrian issuer sold a EUR500m 10-year bullet Tier 2
with a 6% coupon in October of last year. That bond was
considered the key comparable for pricing the new issue, and was
bid at a yield of 5.196%, equivalent to mid-swaps plus 333bp,
according to Tradeweb.
However, a banker involved in the deal had the bond trading
in the mid-swaps plus 320s context pre-announcement.
For pricing, he explained that 0-5bp was added to the 320s
figure to account for a curve extension, 0-10bp for inclusion of
a call, and 15bp of new issue premium.
(Reporting by Aimee Donnellan; Editing by Helene Durand and