Romania’s BCR bank floats first senior non-preferred bonds in CEE region

Romania’s BCR bank floats first senior non-preferred bonds in CEE region
By bne IntelliNews December 17, 2019

BCR, which is part of Austrian Erste Bank group, announced on December 16 that it successfully placed the first senior non-preferred bonds in Romania and the Central and Eastern Europe (CEE) region on the Bucharest Stock Exchange (BVB). The coupon was set at 5.35%. The bonds have been listed, but are not traded yet.

Besides providing additional resources to BCR (not necessarily a key issue for any of the Romanian banks), the bonds help the bank move towards compliance with the new EU regulations on the minimum capacity that banks must have in order to absorb the losses, the Minimum Requirements of own funds and Eligible Liabilities (MREL) and MREL guidelines in line with their targeted resolution strategy.

The RON600mn (€125mn) bond issuance has a seven-year maturity and is the largest local currency denominated bond offer on the local capital market this year.

The bond has been assigned a BBB+ rating by Fitch.

The book building process showed a strong interest from investors, BCR says in its press release. The distribution of the bonds was balanced between asset managers, pension funds, insurance companies and the European Bank for Reconstruction and Development (EBRD) subscribed €26mn of the bonds as well.

“The bond issue reflects our confidence in the local market and our commitment to further strengthen our balance sheet. The diversification of our financing sources has long been in our development strategy. Moreover, we strongly believe that our early action will also contribute to further developing the capital market in Romania,” stated BCR CEO Sergiu Manea.

Non-preferred senior notes are a relatively new category of instruments representing unconditional, senior and unsecured obligations ranked senior to subordinated notes (high risk for holders), but junior to senior preferred notes and any claims benefiting from legal or statutory preferences. The development of such instruments came in response to EU regulations regarding the banks’ capital and their capacity to absorb losses — instead of passing them to debt holders.

Related Articles

Profit of Russian VTB Bank down by 33% in 2M24

Russia’s second-largest bank state-controlled VTB posted a 33% year-on-year decline in net IFRS profit to RUB61.3bn, according to a report by the bank. VTB still plans ... more

Fitch sees “tangible” progress in Uzbek banking reform but warns further improvements may take longer

Fitch Ratings has issued a note highlighting “tangible” progress in the past four years in the reform of Uzbekistan's ... more

EBRD extends €75mn risk-sharing facility to Croatian bank PBZ

The European Bank for Reconstruction and Development (EBRD) has allocated a €75mn for risk-sharing facility to Privredna banka Zagreb (PBZ), a part of the Intesa Sanpaolo Group, as part of a new ... more

Dismiss