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UniCredit issues Additional Tier 1 Notes (AT1) for USD 1.25 billion

UniCredit S.p.A. has launched today Additional Tier 1 notes, denominated in USD, for a total of USD 1.25 billion, with characteristics compliant with new "CRD IV" regulation in place starting from 1st January 2014.

 

The securities are perpetual (with maturity linked to corporate duration of UniCredit S.p.A.) and can be called by the Issuer after 10 years and thereafter at any interest payment date. Notes pay fixed rate coupons of 8,00% per annum for the initial 10 years on a semi-annual basis; if not redeemed, coupon will be reset every 5 years to the then 5-Years Mid-Swap rate + 518 bps. In line with the regulatory requirements, the coupon payments are fully discretionary.

 

Additional Tier 1 will contribute to strengthen the Tier 1 ratio of UniCredit S.p.A. The Notes have a 5.125% Common Equity Tier 1 (CET1) trigger - if the Group or Issuer CET1 at any time falls below the trigger level, the instrument will be temporarily written down to cure the breach, taking into consideration other instruments with similar write down triggers.

 

The transaction represents the inaugural deal for a CRD IV compliant AT1 by an Italian Issuer and the first RegS Perp NC10 USD denominated issue by a European Bank. The offer has encountered exceptional interest from investors, bringing the order book to almost 8 billion USD with approx. 450 investors.

 

Given the positive feedback, the initial price guidance was set at 8.25% area and has been revised to 8.00%/8.25%. Coupon was finally fixed at 8,00% for the initial 10 years, with an issue price set at 100%. Furthermore, the final size of the deal has increased to USD 1.25 billion from initial target of USD 1 billion.

 

The Notes were distributed to different institutional investors' categories such as funds (71%), insurance companies/pension funds (10%) and private banks (9%). The demand was coming from the following regions: UK (39%), Italy (20%), Asia (12%) and Switzerland (8%).

 

UniCredit Corporate & Investment Banking together with Citi, HSBC, Societe Generale and UBS have managed the placement acting as joint bookrunners. The expected rating from Fitch is "BB-". Bonds will be listed on the Luxembourg Stock Exchange.