Phoenix-based Western Alliance Bank issues credit-linked notes

Phoenix-based Western Alliance Bank on Dec. 29, 2021, issued and sold $227 million aggregate principal amount of senior unsecured credit-linked notes due July 2059.

The repayment of principal on the notes is linked to an approximately $4.5 billion reference pool of loans purchased under Western Alliance Bank's residential mortgage purchase program, which results in a reduction in the bank's risk-weighted assets and improved regulatory capital ratios.

The principal and interest payable on the notes may be reduced by a portion of the bank's loss on such loans if one of the following occurs with respect to a loan: Realized losses being incurred by the bank on a loan following a liquidation of the loan or certain other events; or a modification of the loan resulting in a reduction in payments.

The notes were issued in six classes, which accrue interest at rates ranging from secured overnight financing rate plus 3.15% to 8.5%, with interest paid to the noteholders monthly. The aggregate losses, if any, for each payment date will be allocated to reduce the class principal amount and, for modifications, the current interest of the notes in reverse order of class priority beginning with the class B notes.

The net proceeds of the offering will be about $225 million and will be used for general corporate purposes.

The notes were issued pursuant to a note issuance and administration agreement, dated Dec. 29, 2021, by and between the bank as the issuer and Computershare Trust Co. NA as the securities administrator.

Western Alliance Bank is a subsidiary of Western Alliance Bancorp.