Eurobank Holdings has successfully completed the issuance of Tier 2 subordinated bonds worth €400 million, attracting robust demand that reached €2 billion, according to an announcement released on Wednesday.

Alongside the bond issue, the bank has announced an exchange offer for Hellenic Bank’s Tier 2 bonds, valued at €200 million with a 10.25 per cent coupon, as part of its strategy to optimise its capital base.

Regarding the €400 million bond issue, Eurobank stated that investor confidence in its creditworthiness led to demand that exceeded the offer by five times.

This allowed the bank to secure €400 million at a reduced credit spread of 200 basis points, down from an initial indication of 225 basis points.

The bonds, maturing on April 30, 2035, include a call option at par from January 30 to April 30, 2030, and carry an annual coupon of 4.25 per cent.

Settlement is scheduled for January 30, 2025, and the bonds will be listed on the Euro MTF market of the Luxembourg Stock Exchange.

Moreover, it was reported that the issuance attracted interest from 156 investors, with 92 per cent of the allocation going to foreign investors.

The United Kingdom and Ireland accounted for 49 per cent of subscriptions, followed by France with 12 per cent.

In addition, fund and asset managers represented 64 per cent of investors, alternative investment funds 13 per cent, and banks, including private banks, 11 per cent.

Exchange offer for Hellenic Bank bonds

Eurobank Holdings also announced an exchange offer for Hellenic Bank’s Tier 2 bonds, which carry a 10.25 per cent coupon and a call date of March 14, 2028.

The offer, open from January 21 to January 27, 2025, will allow holders to exchange these bonds for additional Eurobank Tier 2 subordinated bonds.

These new bonds will align with the terms of Eurobank’s €400 million Tier 2 issuance, as outlined in the exchange memorandum published on January 21, 2025.

If the offer is accepted, the final size of Eurobank’s Tier 2 bond issuance is expected to exceed €400 million. The results of the exchange offer will be announced on January 28, 2025.

Regulatory efficiency

What is more, Eurobank explained that the new bond issuance and exchange offer are aimed at optimising the group’s regulatory capital efficiency.

The proceeds will be used for general funding purposes. This initiative, the bank said, “demonstrates the group’s commitment to protecting Eurobank depositors” and further extending the issuer’s Tier 2 bond yield curve in the market.

The issuance was managed by Barclays Bank, HSBC, JP Morgan, Morgan Stanley, and UBS Investment Bank, who acted as joint lead managers and dealer managers for the exchange offer.