Barclays gets around US$22 billion of demand for dollar AT1

BARCLAYS has attracted strong investor orders for an additional tier 1 (AT1) sale, in another sign of a revival for the market rocked earlier this year by the historic writedown of Credit Suisse securities.

The London-based bank is selling a US$1.75 billion–dollar perpetual AT1 note that’s callable in June 2030. Demand at the last update was over 12.5 times the size of the debt on offer, according to a source familiar with the matter, who asked not to be identified because they are not authorised to speak about it. This enabled the issuer to tighten the yield to 9.625 per cent from around 10.5 per cent area at initial price talk, with the deal expected to price later on Wednesday (Nov 15).

Last week UBS Group sold AT1 notes, its first such issuance since roughly US$17 billion of Credit Suisse’s AT1s were wiped out as part of a UBS takeover brokered by the Swiss government. The Swiss lender pulled in roughly 10 times the bids for the debt on offer.

The new issuance will bolster Barclays’ AT1 capital structure – an important cushion that helps lenders comply with core capital requirements without relying solely on more expensive equity.

Barclays’ securities will convert into equity if a capital adequacy trigger has been breached, setting them apart from the Credit Suisse AT1 notes that had a complete loss imposed by the Swiss authorities.

Global contingent convertible bonds from banks have rebounded from their slump in March. Bloomberg’s Global CoCo Banking Statistics Index has rallied 15 per cent since Mar 20 and the average yield premium has shrunk 240 basis points since then. BLOOMBERG