AT1 revival in Asia-Pacific picks up steam as CBA plans offering

THE Asia-Pacific market for Additional Tier 1 (AT1) securities is rebounding from a global selloff sparked by the collapse of Credit Suisse Group, as Commonwealth Bank of Australia (CBA) becomes the latest to plan an offering.

Australia’s biggest bank on Tuesday (May 16) detailed plans to sell at least A$750 million (S$671.5 million) of the securities. Pricing is expected to be about 3-3.2 per cent above the bank bill swap rate, and will be finalised through a bookbuild on May 24, the lender said in the statement.

Commonwealth Bank’s announcement follows Sumitomo Mitsui Financial Group’s sale of 140 billion yen (S$1.4 billion) of AT1 notes last month – the first major global deal in the market since the Credit Suisse wipeout. Japanese peer Mitsubishi UFJ Financial Group is also targeting the sale of an Additional Tier 1 bond in yen later this month, and may price the debt on May 26.

Banks globally have returned to selling senior debt in recent weeks, but there is still a dearth of AT1 offerings since Credit Suisse’s rescue, according to data compiled by Bloomberg. Created after the 2008 financial crisis, AT1s are the lowest rung of bank debt, producing juicy returns in good times but taking the first hit when a bank runs into trouble. BLOOMBERG