Reuters: Bankruptcy News: UPDATE 1-Barclays preps second total loss CoCo bond

Reuters: Bankruptcy News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Barclays preps second total loss CoCo bond Mar 27th 2013, 12:06 Wed Mar 27, 2013 8:06am EDT By Aimee Donnellan LONDON, March 27 (IFR) - Barclays Bank is talking to investors about a potential second sale of total write-off contingent capital (CoCo) bonds in less than six months as part of a plan to increase its loss-absorbing capital. The move coincides with an announcement by the Bank of England on Wednesday of stringent capital targets for the country's banks. The Bank's Financial Policy Committee said that banks must achieve a core tier 1 ratio, based on Basel III definitions, of at least 7% of risk-weighted assets by the end of 2013. Barclays' Core Tier 1 capital ratio was 10.9% at the end of 2012. Some banks already meet the requirements, but "for those that do not, the aggregate capital shortfall at end 2012 was around 25 billion pounds", the FPC said in a statement. The new note is expected to be a 10-year non-call five-year issue with a 7% trigger, but a source close to the issuer said that there is flexibility on maturity. "The previous bond was a bullet maturity, but the issuer has preference for a callable structure now," said the source. The offering is part of a liability management exercise where Barclays plans to buy back USD1bn of subordinated debt and replace it with a CoCo that will count as loss absorbing capital under Basel III. The Barclays CoCo will count as Tier 2 capital under Pillar 1, the minimum capital requirements set by global and European regulators, and it will also count towards the additional Pillar 2 capital cushion local regulators can insist on. The bank has given no target size, but a source said it is likely to be of similar size to the liability management target and may be increased if demand proves strong. Barclays declined to comment. Barclays' new CoCo plan follows a USD3bn high-trigger total loss deal in November, the first of its kind, which paved the way for other issuers such as Belgium's KBC to follow suit. Barclays attracted USD17bn of demand for its BBB- rated Tier 2 10-year bullet last November that paid a coupon of 7.625%. The deal has since performed well, narrowing to Treasuries plus 583bp from its pricing level of plus 604bp, according to Tradeweb. NEW YORK CALL The issuer plans to host an investor call at the New York open to discuss the sale, according to a market source. "It would be great to get this done and dusted before Easter but it all depends on how investors respond to the calls," said the source. Barclays is acting as global co-ordinator and structuring adviser, together with Bank of America Merrill Lynch, BNP Paribas, Morgan Stanley and Wells Fargo as joint bookrunners on the upcoming deal. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions