BOV ready to grow loan book following successful €350 million issue of callable senior non-preferred notes

Bank of Valletta has strengthened its ability to meet regulatory requirements to grow its lending book and treasury assets after successfully completing a €350 million issue of callable senior non-preferred notes.

Senior non-preferred notes, a type of bond, are a rank of securities only available to banks. Holders are given preference over other types of bonds in case of liquidation of a company.

As per Cbonds.com, “senior non-preferred bonds come with an intrinsic ‘bail-in’ procedure, that is, if the bank is on the verge of bankruptcy, creditors will receive shares, and if the value of shares rises, creditors will be able to return their money.”

They are a new asset class that many European institutions are expected to issue in order to fulfill their minimum requirement for own fund and eligible liabilities (MREL) requirements.

The BOV issue attracted an order book of around €460 million, with approximately €230 million coming from domestic investors. The issue was closed at €350 million. This was a first for Bank of Valletta, making its debut in the international debt capital markets.

Given their complexity, the notes were not available to the retail market, but could only be subscribed for by professional investors and eligible counterparties for a minimum of €100,000.

The final maturity date of the notes is 6th December 2027. The notes were rated by Fitch as BBB-. The coupon was set at the fixed rate of 10 per cent per annum, which was in line with inaugural issues of similar rating and size in the international markets.

The issue followed approval by the Central Bank of Ireland last September for a base prospectus relating to the establishment of a euro medium term note programme. The notes are expected to be admitted to trading on the regulated market of the Irish Stock Exchange.

Bank of Valletta said it is pleased with the outcome of the notes Issue, with the positive response from investors positioning the bank as a solid investment opportunity and confirming trust in the bank’s current operations and its strategy for the future, especially when one recognises that this issue came at a time of high market volatility.

Bank of Valletta thanked the investment community for its continued confidence in the Bank, as well as Credit Suisse Bank (Europe) S.A. and UBS Europe SE, that have contributed to the successful completion of this offer.