Article: Danske bypasses money laundering legacy in AT1 return

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Danske bypasses money laundering legacy in AT1 return

Tom Revell, 14 May 2021

The lender also took on a challenging market backdrop as it offered investors a US$750m perpetual non-call November 2026 Reg S transaction. The deal came after a volatile session for global stocks on Tuesday, which nudged bank subordinated debt wider in the secondary market and, in the US onshore market, saw insurer Liberty Mutual postpone a junior subordinated note issue.

Some observers were surprised by Danske’s decision to come hot on the heels of Liberty’s postponement. A 4.75% US$1bn Banco Santander AT1 offering sold on May 6 also contributed to a tricky backdrop after it struggled to perform and was bid at a cash price of 99.50 on Wednesday.

Kimberly Bauner, head of treasury at Danske, told IFR the bank expected this year to be more volatile than normal and believes execution windows may be more limited.

“Today was likely not an obvious day for execution, given the weaker equity market and some rates volatility,” she said on the day of the deal. “But there has been stability in the credit markets, and – importantly – the volatility has been orderly, we have not seen panic-buying or selling.”

Leads Bank of America, Citigroup, Danske Bank, HSBC, Societe Generale and UBS marketed the deal with initial price thoughts of 4.625%–4.75%.

With books surpassing US$1.8bn, the deal was ultimately launched at 4.375%.

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