BCP raised € 500 million in the first issue of the bank’s social debt. The yield was 1.84%, down from the original forecast due to strong demand. This is the first operation of its kind to be conducted by a bank led by Miguel Maya and the second by a Portuguese financial institution in the ESG (Environmental, Social and Corporate Governance) segment.
On Monday, the bank, headed by Miguel Maya, began a survey of investors to assess their appetite for issuing social security securities. Following the road show, the 6.5-year bond placement (and the early call 5.5 years later) was closed on Wednesday.
The issue was closed at a premium of 200 basis points to the average euro swap rate, which trades at -0.164%, bringing the final yield on these bonds to 1.842%. The price was 99,527, coupon rate 1.75%.
This fixed interest rate is applied for the first 5.5 years and then the interest rate will depend on the amount of the three-month Euribor with a 2% spread.
The benchmark coupon has been down all morning since the initial forecast 215-220 basis points above the average euro exchange rate with the same maturity of -0.12%. This downward revision of interest will be associated with strong demand, which exceeded 725 million euros (in other words, 1.45 times higher than supply).
The issue is classified as a priority social debt and was placed among institutional investors. Thus, these bonds comply with the MREL regulatory requirements. And the goal is to fund or refinance social assets classified by ESG criteria.
“The amount equivalent to the net proceeds from the issue will be used as a priority for financing and / or refinancing loans provided by the bank through covid-19 lines, in accordance with the terms of the bank of green, social and sustainable bonds. as a clear demonstration of the commitment made by BCP Millennium to support the economy, in particular by financing the micro, small and medium-sized companies most affected by the recent pandemic, ”he said in a statement.
This makes BCP the second Portuguese bank to issue ESG debt, after Caixa Geral de Depósitos, the first national bank to issue sustainable bonds two weeks ago. At the time, the state bank issued EUR 500 million up to six years with a final rate of 0.4%.
The BCP operation involves six investment banks (Barclays, Credit Agricole, JPMorgan, Millennium BCP, Natixis and Unicredit). “The operation that followed the successful roadshow was carried out with the participation of a very diverse group of European institutional investors, many of whom are committed to investing in ESG, reflecting on the one hand the market’s confidence in the Bank and on the other hand , recognizing Millennium BCP’s commitment to sustainable financing, ”he adds.
(News updated at 7:20 pm with BCP comments)
