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Debt issuance 14 Jul 2020

BBVA issues £300 million in subordinated Tier 2 bond

For the second time in a week, BBVA is tapping wholesale markets with a debt issue. In this case, it is a subordinated Tier 2 bond in pound sterling, with an 11-year maturity term and a six-year early amortization option. The issue closed raising £300 million at an initial coupon rate of UKT plus a spread of 315, the reference index for this type of issuance. On July 7, BBVA successfully completed the issuance of a €1 billion bond, the first green bond ever in AT1 format by a financial institution at international level.

The goal of this Friday’s issuance is to underpin the consolidated Tier 2 capital ratio, whose requirement has redefined for BBVA at 2.38 percent, after the advancement of the P2R composition rules established in CRD V. BBVA reported a fully-loaded Tier 2 ratio of 2.40 percent in March 2020. The green bond matures on July 15, 2031, with an early amortization option on July 15, 2026. It has a coupon payable on a yearly basis.

Besides BBVA, the placement banks were Deutsche Bank, Nomura and Morgan Stanley.

This is BBVA’s sixth wholesale issuance this year (and first one in sterling), following the AT1 green bond issue earlier this week, the first COVID-19 social bond in preferred senior debt format, in May, the issue of non-preferred senior debt in the Swiss market in February and the non-preferred senior debt and subordinated Tier 2 debt issues in January.

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