Nordea gets joint USD coupon low in AT1 trio

Nordea launched its second Additional Tier 1 issuance yesterday (Thursday), a multi-currency three tranche package including $500m, Skr2.25bn and Nkr1.25bn pieces for an aggregate of Skr8.15bn (Eu882m) that achieved the joint lowest coupon for an AT1 benchmark.

Having opened the Swedish AT1 market with a $1.5bn perpetual non-call five issue in September, Nordea split its new issue into a US dollar Reg S perpetual non-call 6.5 and Norwegian krone and Swedish krona perpetual non-call 5 tranches.

Leads BAML, Deutsche Bank, Goldman Sachs, JP Morgan and Nordea went out with initial price thoughts of 5.5%-5.625% for the dollar issue and the 325bp area over three month Stibor and Nibor for the krona and krone tranches, respectively.

The Nordic currency tranches were then priced at 310bp over and the US dollar at 5.25% – matching the low achieved by compatriot Svenska Handelsbanken in a $1.2bn inaugural AT1 on 18 February.

According to a syndicate official away from the leads, Nordea’s new AT1 priced roughly flat to its outstanding perpetual non-call September 2019 that was quoted at a yield of around 4.95%. He suggested that the inclusion of the Norwegian and Swedish tranches and the demand they encountered had enabled Nordea to achieve greater price tension in the dollar tranche.

The temporary write-down notes have dual triggers of an 8% CET1 ratio at the group level and 5.125% at the issuer level. The paper is rated BBB/BBB by Standard & Poor’s and Fitch.