HG bonds: Swedbank returns with 2024 senior preferred notes; terms

Swedish financial firm Swedbank AB (publ) today completed a $750 million offering of 0.85% three-year senior preferred notes (A+/Aa3/AA–) due March 18, 2024, at T+55, or 0.87%.

A previously proposed issue of six-year (non-call five) senior non-preferred notes (A–/Baa1/A+) was dropped during the marketing process.

Swedbank last tapped the market in September 2020, when it placed a $1 billion offering of 0.60% three-year senior preferred notes due Sept. 25, 2023, at T+45, or 0.604%.

Swedbank’s ratings profile includes stable outlooks all around.

Swedbank was plagued by investigations from Swedish and Estonian regulatory authorities about serious anti-money-laundering deficiencies and regulatory misconduct at Swedbank between 2015 and the first quarter of 2019. During 2019, the bank replaced much of its top management and expressed its commitment to amend the deficiencies in control and governance.

Last October, Fitch affirmed its A+ issuer default rating on the bank, noting that its “risk appetite incorporates the material shortcomings in its anti-money laundering (AML) risk controls identified by Swedish and Estonian regulators in March 2020.”

S&P Global Ratings said in a ratings rationale published in October 2020, "We also anticipate that Swedbank will continue to build considerable additional loss absorbing capacity (ALAC) buffers in the coming years as it fulfils its minimum requirements for own funds and eligible liabilities (MREL) requirements, likely by replacing a large share of senior unsecured debt with senior subordinated debt instruments through the revised 2024 deadline. As such, we believe that Swedbank's ALAC buffer will durably exceed 5% of our risk-weighted assets (RWAs) metric by 2021, which allows us to incorporate one notch of uplift for ALAC support into our long-term rating on Swedbank." Terms: