UniCredit SpA said Dec. 14 that it launched a €500 million issuance of deeply subordinated resettable Additional Tier 1 notes in a private placement format.
The perpetual securities carry a coupon of 9.25% per annum, which can be suspended at any point and does not accumulate while suspended, for the initial 5.5 years. The notes can be called by the issuer in June 2022, and if not redeemed after the call date, the coupon will reset every five years to the prevailing five-year midswap rate plus 930 basis points.
The securities have a temporary write-down mechanism that will be triggered if UniCredit's common equity Tier 1 ratio falls below 5.125%.
The Italian lender said it decided to proceed with the transaction after markets responded positively to the 2016-2019 strategic plan it announced Dec. 13, which includes a €13 billion rights issue to strengthen its capital base.
UniCredit Corporate & Investment Banking and UBS acted as joint lead managers on the placement.