UniCredit (Baa2/BBB/BBB+) has launched today a Lower Tier2 subordinated benchmark denominated in EUR with 12 year maturity (callable after 7 years) for an amount of Eur 1 billion.
The bond pays a fixed coupon of 5.75% during the first 7 years, and has an issue price of 99.91%, consistent with a spread of 410 bps over the swap rate. In case the issuer does not call the bond after 7 years, the coupon for the subsequent period until maturity will reset on the base of the 5 years swap rate at the end of the seventh year.
UniCredit Bank AG, Commerzbank, Goldman Sachs, Morgan Stanley and Royal Bank of Scotland have managed the placement acting as joint bookrunners.
The transaction has encountered an extraordinary demand with approximately 350 institutional investors involved (mainly funds with almost 85% of the final allocation) and an order-book of approximately 3.4 billion EUR, originated by UK/Ireland (ca 32%), Italy (ca 22%), followed by Germany/Austria (ca 16%) and France (ca 9%).
The bond is documented under the issuer's Euro Medium Term Notes Program. In light of the subordinated status, the expected ratings are as follows: Ba1 (Moody's) / BBB- (S&P) / BBB (Fitch). The bond will be computed in UniCredit's Tier 2 regulatory capital, contributing to the Total Capital Ratio. Listing will be on the Luxembourg Stock Exchange.