Banco Santander SA placed €1.5 billion in Additional Tier 1 bonds and announced plans to redeem another €1.5 billion contingent convertible bonds, or CoCos, callable March 12.

The Spanish bank said Jan. 9 that the new CoCo bonds carry an annual coupon of 4.375% for the first six years, after which it will be reviewed every five years by applying a margin of 453.4 basis points on the five-year midswap rate.

The CoCos are perpetual but could be called under certain circumstances and would be converted into newly issued ordinary shares in Santander if the group's common equity Tier 1 ratio were to fall below 5.125%. As of Sept. 30, 2019, the bank's consolidated CET1 ratio was 11.30%.

The CoCos to be redeemed early were issued in 2014. The bonds were callable in February 2019 but the bank chose not to do so then, causing consternation on the debt markets.