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UPDATE 1-Barclays offers 3.4 bln stg bond swap
Thu, 30th Apr 2009 17:01
LONDON, April 30 (Reuters) - Barclays Plc on Thursday offered to exchange 3.4 billion pounds ($5 billion) of bonds into debt of slightly higher quality to help strengthen its balance sheet.
Rivals including Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered have recently offered to buy back or exchange notes to boost capital.
Barclays said its offer was partly in response to requests from investors to have the option of exchanging notes following the offers by other banks.
It is offering to exchange seven tranches of Upper Tier 2 sterling-denominated notes into dated Lower Tier 2 bonds. It is offering between 70 percent and 80 percent of face value.
About half take-up of the offer would boost its core Tier 1 capital ratio by about 12 basis points. The ratio is expected to rise to about 7.2 percent when it completes the sale of its iShares asset management arm, lower than most rivals.
Senior bonds are the highest quality bank debt, followed by Lower Tier 2, Upper Tier 2 and Tier 1 at the bottom end of the scale. Each have different rules on coupon payments and redemptions.
'The main difference between this and what Lloyds and RBS offered is that this is not an exchange into senior bonds,' said Colin Purdie, investment manager of fixed income at Aegon Asset Management.
'From Barclays' point of view, this is a great deal depending on the take-up. They are keeping their Tier 2 capital the same, boosting their Tier 1 capital which is what the market is looking at and they are booking in a capital gain,' he added.
The attractiveness of the offer from an investor point of view will depend on the terms on the new bonds on offer. Those are due to be released next week, said Purdie.
If around 75 percent of bondholders opt to exchange their bonds, Barclays will make a gain of between 500
and 600 million pounds, Purdie estimated.
($1=.6739 Pound)
(Reporting by Natalie Harrison and Steve Slater; Editing by David Cowell) Keywords: BARCLAYS/BOND EXCHANGE
(natalie.harrison@reuters.com; +44 207 542 2687; Reuters Messaging: natalie.harrison.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Rivals including Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered have recently offered to buy back or exchange notes to boost capital.
Barclays said its offer was partly in response to requests from investors to have the option of exchanging notes following the offers by other banks.
It is offering to exchange seven tranches of Upper Tier 2 sterling-denominated notes into dated Lower Tier 2 bonds. It is offering between 70 percent and 80 percent of face value.
About half take-up of the offer would boost its core Tier 1 capital ratio by about 12 basis points. The ratio is expected to rise to about 7.2 percent when it completes the sale of its iShares asset management arm, lower than most rivals.
Senior bonds are the highest quality bank debt, followed by Lower Tier 2, Upper Tier 2 and Tier 1 at the bottom end of the scale. Each have different rules on coupon payments and redemptions.
'The main difference between this and what Lloyds and RBS offered is that this is not an exchange into senior bonds,' said Colin Purdie, investment manager of fixed income at Aegon Asset Management.
'From Barclays' point of view, this is a great deal depending on the take-up. They are keeping their Tier 2 capital the same, boosting their Tier 1 capital which is what the market is looking at and they are booking in a capital gain,' he added.
The attractiveness of the offer from an investor point of view will depend on the terms on the new bonds on offer. Those are due to be released next week, said Purdie.
If around 75 percent of bondholders opt to exchange their bonds, Barclays will make a gain of between 500
($1=.6739 Pound)
(Reporting by Natalie Harrison and Steve Slater; Editing by David Cowell) Keywords: BARCLAYS/BOND EXCHANGE
(natalie.harrison@reuters.com; +44 207 542 2687; Reuters Messaging: natalie.harrison.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
