Nordea seizes strong market to sell AT1 bond

2 min read
William Hoffman

Nordea Bank saw US$4.75bn of investor demand on Tuesday for an Additional Tier 1 bond, the latest such security from a European bank to hit the US dollar market in the past few weeks.

Nordea raised US$1.25bn from the perpetual non-call seven transaction, rated BBB/BBB. It priced at a yield of 6.625%, which was tightened in from initial price thoughts of 7% area.

The deal came a day after French bank BNP Paribas priced a slightly larger US$1.5bn AT1 - a perpetual non-call five - which priced at the same yield of 6.625%. BNP Paribas’ deal, however, was slightly lower rated at Ba1/BBB-/BBB-, and saw a larger order book of US$8bn. nL8N2155ZP

But renewed money-laundering headlines may have deterred some investors from the Nordea trade.

“I’m sure investors will throw in some comments on that, but when the markets are as strong as they are, and yields trading where they are, I would expect this deal to go well,” one banker away from the trade told IFR.

“If it was a tougher state of the market they might have gotten more push back.”

Nordea is just one of the Nordic region’s banks to have featured in reports of alleged money laundering in recent weeks. nL5N20R1RE

It handled €700m in suspicious transactions between 2005 and 2017, Finnish broadcaster Yle reported earlier this month, citing leaked documents. But its AT1 bonds were barely impacted. Its 5.5% perpetual non-call five, which was sold in September 2014, has been trading in a narrow range of 99.25-99.86 over the last month, according to MarketAxess.

“Even if Nordea is involved, it does not necessarily imply wrong-doing on its part, so there are a lot of unanswered questions,” CreditSights said earlier this month.

The research firm also said Nordea’s involvement was smaller than those of Nordic rivals Swedbank and Danske Bank.

If the alleged number of transactions against Nordea does not grow in future revelations the regulatory fines should be “easily manageable” given net income of €3.08bn, CreditSights said.

AT1 issuance got off to a slow start this year, but as spreads have rallied other European banks, including Credit Agricole and UBS, have taken advantage of better risk sentiment to sell AT1 debt in the US-dollar market.

The euro bond market also saw a blockbuster day for bank capital on Tuesday.

Bank of America Merrill Lynch, Barclays, Goldman Sachs, JP Morgan, Nordea and UBS were bookrunners on the Nordea trade.