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Fixed income 20 Feb 2019

BBVA places second debt issue in six days: €1 billion in senior non-preferred debt

After placing €750 million of subordinated debt last Thursday, BBVA has returned to wholesale markets with a €1 billion issue of senior non-preferred debt. Demand exceeded the initial offer by three and half times, making it possible to reduce the initial price (mid swap price +130 basis points) by 23 points.

Good market conditions coupled with high demand – €3.5 billion with more than 240 orders from institutional investors – made it possible to reduce the initial price to mid swap +107 basis points. Underwriting banks were Barclays, BBVA, Crédit Suisse, Morgan Stanley, Natixis, and Société Générale.

This is BBVA’s second wholesale issue of debt in just one week. On February 14, the bank issued a 10-year €750 million euros of Tier 2 subordinated debt, which was oversubscribed more than five times.

The instrument issued today is senior non-preferred debt with a five-year term and a maturity date on February 28, 2024. It represents part of BBVA’s 2019 financing plan, which envisages issuing senior non-preferred debt for an annual total of between €2.5 and €3.5 billion, depending on market conditions.

Up to 60 percent of investors have been asset managers;20 percent, banks and private bankers, and 16 percent, insurers and pension funds. By geography, 32 percent of investors come from France; 14 percent, from Spain; 12 percent, from Germany and Austria; 12 percent, from Italy; 9 percent, from Nordic countries; 7 percent, from Benelux, and 7 percent, from the U.K. and Ireland.

BBVA’s 2019 financing plan seeks the dual objective of keeping its Tier 1 (AT1) and Tier 2 instruments covered while ensuring compliance with MREL requirements.

Last year, BBVA issued four different tranches of securities: two issues of non-preferred senior debt, one for €1.5 billion euros (in February 2018) and the other for €1 billion (in May 2018); an issue of Tier 2 subordinated debt for $300 million (in May 2018); and a €1 billion issue of CoCos in September 2018.

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