CaixaBank Issues €1,000M Convertible Shares for Capital

CaixaBank Issues €1,000M Convertible Shares for Capital

CaixaBank launches an issue of €1,000 million in convertible shares, enhancing its additional Tier 1 capital to strengthen its financial position.

In a strategic maneuver that has sent ripples through the financial sector, CaixaBank has announced the issuance of perpetual preference shares, with a staggering value of €1 billion. This initiative, disclosed to the National Securities Market Commission (CNMV) on Thursday, is poised to bolster the bank’s capital structure by classifying these preferred shares as Additional Tier 1 capital.

The financial institution’s foray into this capital-raising endeavor comes at a time when various banks, alongside notable corporate entities such as Telefónica, have successfully amassed over €4.5 billion in debt. Notably, this particular issuance is exempt from the pre-emptive subscription rights typically afforded to existing shareholders, a decision that underscores the urgency and strategic intent behind the offering.

The terms of the issuance, meticulously outlined by CaixaBank‘s leadership under Tomás Muniesa, stipulate that the shares will be issued at par value. The remuneration for these preferred shares, which is discretionary and contingent upon specific conditions, has been set at an attractive 6.250% per annum until January 24, 2033. Following this initial period, the remuneration will undergo a review every five years, incorporating a margin of 393.5 basis points above the applicable five-year swap rate, as detailed in the information submitted to the CNMV.

CaixaBank further elucidates that, upon receiving approval and registration from the CNMV for the prospectus related to the trading of these shares, they will be recognized as Additional Tier 1 capital in accordance with prevailing solvency regulations. The operation is being facilitated by a consortium of agent banks, including Barclays, BNP Paribas, Citigroup, and Société Générale.

These reference shares, while perpetual in nature, may be redeemed under certain circumstances at CaixaBank‘s discretion. Moreover, they are set to convert into newly issued ordinary shares if the bank’s Tier 1 capital ratio falls below the prudential threshold of 5.125%. The conversion price will be determined by the higher of the average daily volume-weighted prices of CaixaBank shares over the five trading days preceding the announcement of the conversion event, €3.779 (subject to anti-dilution adjustments), or the nominal value of CaixaBank’s shares at the time of conversion, currently pegged at one euro.

This issuance is exclusively targeted at professional clients and eligible counterparties, with retail investors explicitly excluded from participation. CaixaBank intends to seek admission for trading in the AIAF Fixed Income Market.

In a parallel development, Santander has recently made headlines by successfully raising £500 million (approximately €593.35 million) in six-year senior non-preferred debt, following a remarkable two-day operation that netted €2.274 billion in dollar and Swiss franc transactions. Meanwhile, Telefónica has also made its mark, securing €1 billion in nine-year debt, further illustrating the dynamic landscape of corporate emissions in the current financial climate. 

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