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Nationwide offers to buy back 11 series of notes, to issue bail-in-able debt

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Nationwide offers to buy back 11 series of notes, to issue bail-in-able debt

British mutual financial institution Nationwide Building Society on Feb. 28 launched tender offers for 11 series of notes, and said that it would issue a new type of bail-in-able debt.

The U.S. tender offers target holders of $1.00 billion of 2.35% notes due January 2020, $800.0 million of 6.25% notes due February 2020 and $1.25 billion of 2.45% notes due July 2021. The offer will expire March 7, the same day the purchase price will be determined. The results are set to be announced the following day, with settlement expected for March 12.

Nationwide also offered to repurchase €750.0 million of 1.625% notes due April 2019, €1.25 billion of 0.500% notes due October 2019, €1.00 billion of 1.125% notes due June 2022, €1.25 of 1.25% notes due March 2025, £700.0 million of 5.625% notes due September 2019, £500.0 million of 2.25% notes due April 2022, £500.0 million of 3.0% notes due May 2026 and £500.0 million of 3.25% notes due January 2028.

The company said it would accept up to £3.25 billion of notes validly tendered, although it can still lower or increase the amount.

The non-U.S. tender offers are subject to Nationwide's issuance of U.S. dollar-denominated senior nonpreferred notes, its first issuance of this kind of bail-in-able debt. As for the allocation of the new notes, Nationwide said it will prioritize investors who have already tendered their notes.

Pricing of the non-U.S. offers are expected March 9, to be followed by the announcement of results. Settlement is expected March 13.

Nationwide said the offers are meant to manage its overall wholesale funding and to improve its future interest expense while building its stock of liabilities that count toward the company's minimum requirement for own funds and eligible liabilities, known as MREL.

"After allowing for certain redemptions taking place in March, the society will have approximately £3.6 billion of other qualifying MREL instruments, equal to 1.6% of U.K. leverage," CFO Mark Rennison said, noting that the company has no scheduled redemptions of MREL-eligible instruments during the 2018/2019 financial year.

"We anticipate that successful completion of this exercise will conclude the majority of the society's required issuance in connection with end-state MREL compliance."