Nordea eagerly awaited after announcing first Swedish AT1

Sep 12th, 2014

Nordea is set to launch the first Additional Tier 1 (AT1) instrument from Sweden next week, having embarked upon investor meetings for what will be a high, 8% trigger temporary write-down structure.

NordeaThe Swedish bank will become only the second financial institution from the Nordics to issue an AT1, after Danske Bank was the first in March.

Nordea’s AT1, which is set to be rated BBB/BBB+ by Fitch and Standard & Poor’s, is being eagerly awaited.

“Like HSBC’s, Nordea’s inaugural AT1 is a landmark trade you can’t afford to miss,” said Vincent Hoarau, head of FIG syndicate at Crédit Agricole CIB. “It is already a success story in itself.”

HSBC launched its inaugural AT1 yesterday (Wednesday), a $5.6bn (Eu4.3bn) equivalent transaction that garnered $19bn of orders, while Crédit Agricole SA issued a $1.25bn deal today (Thursday) on the back of a $7bn book. The deals marked a positive turn for the CoCo market after a disappointing post-summer reopening of the sector by Santander on Tuesday of last week (2 September).

Swedish banks had previously expressed an interest in joining the AT1 market, but had cited regulatory uncertainty as holding them back. Nordea had approval to issue CoCos from its AGM.

Among the regulatory uncertainties was what trigger level would be required and Nordea’s 8% CET1 trigger is higher than usual.

Assigning its BBB+ rating, S&P said that it believes that Nordea’s CET1 ratio is unlikely to drop before its 15.2% level of 30 June in the next 18-24 months.

Nordea began a roadshow yesterday taking in London, New York, Amsterdam, Frankfurt and Zurich, as well as a global investor call, and it will conclude tomorrow (Friday).

Bank of America Merrill Lynch, Citigroup, Goldman Sachs and UBS have been mandated as leads.

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