Barclays CoCo Bonds Breaks Conventions

April 5
2:21 AM 2013

Barclays new CoCo bond has defied naysayers with its pricing for its ten-year-non-call five issue deemed hard to sell in the US market. The bank set the price of the US$1 billion bond issue having a 7.75% coupon.

With the said pricing, the order book for the issue was set above US$3.5 billion and over 50% of the bonds have been sold to US accounts, contrary to what critics had predicted.

According to Jennifer Moreland, head of long-term unsecured funding and capital issuance of Barclays, "

"We communicated a desire for a standard, modest benchmark size and managed to engage US and European institutional investors en masse which is exactly what we hoped to do. This is a ground-breaking structure and the next logical step in our plan to raise additional capital."

This is a unique structure that is not often seen in the investment grade bond issue market. Amongst the features which were highly criticized was the bond being written off if the bank's common Tier 1 capitalization goes under 7%.

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