SNS Reaal NV (SR)’s junior bonds tumbled to record lows after the Dutch government said the lender will be nationalized as real estate losses eroded its capital.
SNS’s 250 million euros ($341 million) of 6.258 percent Tier 1 perpetual notes were quoted 25 euro cents, or 61 percent, lower at 15.5 cents as of 9:30 a.m. in London, according to Bloomberg prices. Its senior bonds rose after the government said investors in these notes won’t face losses.
The Utrecht, Netherlands-based
bank and insurer received a government bailout in 2008, two years after acquiring ABN Amro Holding NV’s property finance unit. Dutch Finance Minister Jeroen Dijsselbloem said at a press conference today that, while the government will “expropriate” SNS’s equity and subordinated debt, senior bondholders won’t be affected.
“It’s not clear what value will be given to sub debt, if any,” said Eva Olsson, an analyst at Mitsubishi UFJ Securities in
London. “The situation is aggravated by the fact no private investor is likely to participate in the recapitalization.”
SNS’s 301 million euros of 6.625 percent senior, unsecured bonds maturing in November 2016 rose 1.7 euro cents to 105.36, Bloomberg prices show. The Dutch lender’s 615 million euros of 0.285 percent senior floating-rate notes due June 2014 climbed 1 euro cent to 94.78 cents.
SNS’s core Tier 1 capital ratio, a measure of financial strength, fell to 8.8 percent at the end of the third quarter, below the European Banking Authority’s 9 percent minimum, as real estate losses mounted.