LONDON, May 15 (Reuters) - Britain's Barclays Plc will issue at least $1 billion of new bonds that can convertinto shares if the bank hits trouble under an offer to debtinvestors to exchange old bonds for new securities.
It is the latest move by Barclays to adjust its capitalstructure to improve its capital and leverage ratios to meet newregulations.
Barclays has said it plans to issue a total of about 7billion pounds ($11.8 billion) of bonds that would convert intoshares if its core equity ratio falls below a certain level,which for UK banks has been typically set at 7 percent.
Barclays has so far sold about 2 billion pounds of theinstruments, dubbed contingent capital or "CoCos", and theexchange offer announced on Thursday will add to that amount.
Barclays said it is offering the holders of some sterling,euro and dollar denominated bonds the chance to swap into thenew instruments. It will issue a minimum of $1 billion of newinstruments under the terms of the offer, and is likely to issueslightly more than that amount, depending on the take-up frominvestors.
There has been a rush of European banks selling CoCos thisyear, which are regarding as riskier than normal debt due to thethreat of conversion into shares, but typically pay annualinterest of 6-9 percent.
Bankers predict up to a record 40 billion euros of bondscould be issued this year, led by the likes of Barclays,Deutsche Bank and Societe Generale.
The aim is to create an extra layer of protection to preventa repeat of the 2007-2009 financial crisis when taxpayers borethe brunt of bank bailouts.($1 = 0.5954 British Pounds) (Reporting by Steve Slater; Editing by Elaine Hardcastle)