(IFR/Reuters) - Standard Chartered is preparing to launch its inaugural Additional Tier 1 bond as it kicks off investor meetings on Tuesday.
The roadshow meetings will take place in London on Tuesday and Wednesday, with calls for US investors on Wednesday. The bank will also market to Asian accounts on Wednesday and Thursday.
Standard Chartered said earlier this month that it planned to issue AT1 capital this year to manage its total capital efficiently and to meet tougher capital rules.
A banker said that Standard Chartered could take confidence from the success of HSBC’s Yankee AT1 deal on Monday, when it was swamped with more than US$16bn of orders for a US$2.25bn deal.
But another thought Standard Chartered would need to pay a concession to HSBC which priced at 6.375%.
“There has been a lot of noise around the name, and not necessarily very positive. There has been a heavily rumoured potential rights issue, which would been more beneficial to have got done ahead of the AT1 from a price perspective,” he said.
Some analysts have said the bank needs a rights issue to improve its capital strength after a drop in profits in the last two years, and said new CEO Bill Winters could opt for one when he arrives in June. The move could now ease pressure on the bank to raise capital through a rights issue.
Outgoing CEO Peter Sands this month said the bank had no plans, nor any need, for a rights issue.
It is expected to issue over time about US$5bn of bonds that can convert into shares or be wiped out if its capital falls below a set level.
The Additional Tier 1 deal’s documentation is 144a Reg S, with a 7% Common Equity Tier 1 (CET1) trigger equity conversion.
The bank had an end point CET1 ratio of 10.7% at December 2014. It has a CET1 target of 11 to 12% for 2015, according to its annual results presentation.
Standard Chartered Bank and Barclays are structuring advisers and joint lead managers, while Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and UBS are also joint leads.
