Interessante: UCG proverà ad anticipare Basilea III
UniCredit points way for hybrid bonds
By Jennifer Hughes
Published: July 13 2010 18:30 | Last updated: July 13 2010 18:30
A new type of hybrid bond offered by Italy’s
UniCredit could provide a template for European banks wanting to raise capital ahead of the new rules on funding.
Hybrid bonds, which contain features of debt and equity, became an important part of regulatory capital calculations before the financial crisis because they were seen as a relatively cheap way to raise capital.
However, existing hybrid structures largely failed at the height of the crisis because banks struggled to exercise the bonds’ equity-like features in a way that would allow them to hold onto cash and force the bondholders to take losses.
As part of the next round of global regulatory reform – known as Basel III – there will be a new set of rules governing which hybrids count as capital. But delays to the new regulations have virtually closed the hybrid market this year because banks are unsure of what might qualify.
UniCredit, Europe’s third-largest bank by market value, on Tuesday began talking to investors about a new hybrid that will comply with European Union regulations coming into force at the end of this year.
Although the European rules, known as CRD II, are unlikely to be exactly the same as Basel III, bankers said the new features of the UniCredit bond structure could be attractive to other banks considering hybrids. The underlying principles of CRD II and Basel III are likely to be similar.
“This allows other regulators to look at this structure and consider what they will allow their own banks to do. It could provide a bridge – we know Basel III will come in at some point, but this could help banks manage the transition to it,” said one banker close to the deal.
The new bond will allow for interest payments to be suspended and its value to be written down should the bank’s capital fall below pre-determined levels. If the new bond does not qualify under Basel III, UniCredit can redeem the bond at par or modify some of the terms. Credit Suisse, JPMorgan and UniCredit are managing the issue.
Old hybrids tended to have fewer pre-agreed triggers, leaving the suspension of interest or redemptions at banks’ discretion. Investors reacted angrily when this was exercised, but regulators eventually forced many banks that had sought state aid to suspend payments where possible.
The UniCredit deal follows a handful of new structures known as contingent convertibles, or CoCo bonds. The UK’s
Lloyds offered a form of these in an exchange offer late last year. Rabobank, the Dutch mutual,
attracted strong investor interest in March in a structure similar to catastrophe bonds, where investors, in effect, bet that a specified event – in this case, that breaching a set level of capital – will not happen.
FT.com / Capital Markets - UniCredit points way for hybrid bonds
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E' da capire bene in cosa si differenzierà questa P rispetto alle vecchie. Mah... forse qualche vecchia emissione rischia di ricadere nella blended version di Basilea III.
ma ancora non compro...
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