Search Mark
Home / Industry Dynamics

Barclays Resurgence In Demand For AT1 Bonds   

Pentagon Fails Sixth Consecutive Audit

The Pentagon’s accounting systems audit has failed for the sixth consecutive year, despite noted improvements, says Defense Department CFO Mike McCord. Achieving a “clean” audit remains a distant goal, demanding faster and more substantial progress, while seven sub-audits passed this year without detecting fraud.

French Court Demands UBS Fine Retrial

France’s highest court ordered a retrial for UBS over a 1.8 billion-euro fine, upholding the bank’s guilty verdict but nullifying the penalty decision. This ruling extends the uncertainty surrounding UBS’s final fine, prompting the bank to express disappointment and prepare for the forthcoming trial.

Palo Alto Networks Reports Stock Drop

Palo Alto Networks witnessed a 20% increase in fiscal first-quarter revenue due to high cybersecurity product demand. However, concerns over the company’s future prospects led to an 8% drop in after-hours trading, following a 2% decline in regular session trading, despite exceeding analyst predictions.

Today’s News

The European bank debt market has experienced a remarkable resurgence in demand for additional tier-one (AT1) bonds, signaling a recovery in investor confidence. After recent tumultuous events, institutions like Barclays and UBS have witnessed significant interest, marking a potential turnaround for this segment.

Image Source: CNBC

Barclays Sees Strong Investor Interest

Barclays, a U.K.-based lender, received an overwhelming response from investors, gathering more than USD 13 billion in demand for an AT1 bond set to mature in June 2030. This robust demand prompted a revision in the bond’s yield from an initial 10.5% down to approximately 9.6%.

AT1 Bonds And Market Struggles

The market for AT1s was profoundly impacted by the collapse of Credit Suisse in March, resulting in the loss of USD 17 billion worth of AT1s. This setback initially dissuaded investors from returning to the market after facing significant losses in products introduced post the global financial crisis.

Analysts were anticipating the debut of the initial AT1s released under Swiss jurisdiction to gauge investor interest. This anticipation stemmed from the contentious nature of the Swiss financial regulator, FINMA’s decision, to write-down the Credit Suisse bonds that sparked considerable controversy.

This decision has triggered legal claims amounting to at least USD 9 billion, as bondholders contest that the strict conditions in their contracts, which led to the wipeout, were not met.

Despite the initial hesitancy, several banks such as BNP Paribas, BBVA, and Société Générale cautiously resumed issuing AT1s, finding willing buyers. Last week, UBS marked a significant milestone by issuing a USD 3.5 billion bond, attracting a staggering USD 36 billion in demand and witnessing a reduction in yields from over 10% to 9.25%. This marked the largest AT1 bond sale by a European bank since March 2018, as per LSEG data, ranking among the top five in history.

Market Trends And Future Outlook

The UBS sale propelled AT1 borrowing to USD 53.5 billion this year, a considerable rebound from the recent downturn. Analysts attribute this resurgence to the European Central Bank and the Bank of England, which assured investors against the fate suffered by holders of Credit Suisse’s debt.

Tim Kurpis, a portfolio manager at AllianceBernstein noted, “The AT1 market in general has recovered very significantly, and I think investors are very comfortable with the regulatory regime in Europe and the U.K.”

Barclays declined to comment.

Share to

Industry Dynamics

Barclay Family Regains Telegraph Ownership Amidst U.K. Probe

Today’s News  The Barclay family has regained temporary ownership of the Telegraph newspaper as the prospective Abu Dhabi-backed owner awaits the U.K. government’s probe results regarding its takeover. Following six months under the control of its lender, Lloyds Banking Group, the media group emerged from financial receivership. The family settled its outstanding debts using funds […]

2023-12-5 | Industry Dynamics

Japanese Developers Seek U.S. Mergers And Acquisition 

Today’s News  Three major Japanese developers are actively pursuing opportunities to acquire housebuilders in the United States, seeking growth outside their shrinking domestic market.   Daiwa House, Sekisui House, and Sumitomo Forestry are aggressively exploring potential targets, with intentions of possible acquisitions in the U.S. market. Four M&A bankers and lawyers familiar with the matter […]

2023-12-4 | Industry Dynamics

Weekly Economic Calendar For December 4th, 2023 – December 9th, 2023

Weekly Economic Calendar For December 4th, 2023 – December 9th, 2023.

2023-12-1 | Industry Dynamics