BCR, Romania’s second biggest lender by assets, which is part of Austrian Erste Bank group, announced on December 16 that it successfully placed the first senior non-preferred bonds in Romania and the CEE region on the Bucharest Stock Exchange (BVB).
Non-preferred senior notes are a relatively new category of instruments representing unconditional, senior and unsecured obligations ranked senior to subordinated notes (high risk for holders), but junior to senior preferred notes and any claims benefiting from legal or statutory preferences. The development of such instruments came in response to EU regulations regarding the banks’ capital and their capacity to absorb losses - instead of passing them to debt holders.
The RON 600 million (EUR 125 mln) bond issuance has a 7-year maturity and is the largest local currency denominated bond offer on the local capital market this year. The bond has been assigned by Fitch a BBB+ rating.
The book building process showed a strong interest from investors, as the deal was successfully priced at a coupon of 5.35% per year.
The distribution of the bonds was balanced between asset managers, pension funds, insurance companies and the European Bank for Reconstruction and Development (EBRD) subscribed part of the bonds as well (EUR 26 mln).
Besides providing additional resources to BCR, the bonds help the bank move towards compliance with the new EU regulations on the minimum capacity that banks must have in order to absorb the losses, the Minimum Requirements of own funds and Eligible Liabilities (MREL) and MREL guidelines in line with targeted resolution strategy.
“The bond issue reflects our confidence in the local market and our commitment to further strengthen out fortress balance sheet. The diversification of our financing sources has long been in our development strategy. Moreover, we strongly believe that our early action will also contribute to further developing the capital market in Romania,” stated BCR CEO Sergiu Manea.