(Adds market comment and background information)
By Aimee Donnellan
LONDON, July 10 (IFR) - Banco Popular Espanol has pulled a
contingent convertible deal citing poor market conditions,
according to a lead manager.
"Due to the heightened volatility in secondary markets, the
issuer has decided that conditions are not conducive for primary
issuance and subsequent secondary stability at this time," said
the lead managers in a statement on Thursday.
"We have postponed the issue due to the unfavourable market
conditions, but investors' feedback during the roadshow had been
very good. It's not a cancellation, just a postponement,
although there is no new date for the issue," a spokesman for
Earlier on Thursday, leads began marketing a perpetual
non-call five Additional Tier 1 at 7%-7.25%. The deal would have
strengthened BPE's balance sheet ahead of the upcoming ECB
Market observers slammed the decision to attempt the sale in
a market that was being weighed down by concerns about BES,
Portugal's largest listed bank.
"This was the wrong day and the wrong transaction," said a
banker away from the deal.
"I would have held off from even trying to market a deal
like this when BES and Portugal Telecom are causing so much
Another banker shared that view: "It doesn't surprise me to
hear that they are pulling it."
"The pricing was wrong even on a good day, particularly as
their outstanding bond which was the main comparable had sold
off by a half a point in the past day."
BPE was heard to be targeting as much as 750m of AT1
capital. The deal would have converted into equity if the bank's
Common Equity Tier 1 ratio fell below 7%.
Together with a 500m low-trigger CoCo issued in October, a
750m sale on Thursday would have filled the bank's 1.5% capital
requirements bucket in the context of around 84.5bn of
risk-weighted assets, according to CreditSights.
(Reporting by Aimee Donnellan, additing reporting by Jesus
Aguado, editing by Julian Baker)