The New Bank announced on Thursday one bond repurchase operations, proposing to make an investment to 500 million euros. The debt buyback is part of a series of measures to “return to profitability New Bank” and improving its capital ratios, says the institution led by Stock da Cunha in the statement sent this morning to the Portuguese Securities Market Commission (CMVM).
With this offer, the bank gives the market a positive signal regarding its cash position at the same time can reduce the cost of debt, as able to buy back the bonds at a cost lower than it would have to pay to maturity of these issues, which have maturities in 2019 and 2022. This bond repurchase strategy to reduce financing costs has been used frequently in the past year by the State.
the offers “that were authorized by the Bank of Portugal on 3 June 2016, are one of the measures envisaged in the business plan [resulting from the agreed restructuring plan with Brussels] and which aims to strengthen New capital position Bank and improve its future financial margin, “reads the memo released this morning, which also points out that the bank will be subject this year the” new and more stringent rules and regulatory capital requirements. “
they are being offered eight emissions three maturing in 2022 and another five with repayment date in 2019. the bank invites the bondholders to propose the sale of these securities, “in cash at a price to be determined in accordance with a procedure Dutch auction unmodified, “although he notes that it reserves” the right, with full discretion, accept or reject the obligations offered to them. “
the offers begin on Thursday and end at 16 hours of 29 June. “The Purchase Minimum Prices reflect a premium of approximately 1.50% to 2.50% above market prices observed for the obligations” on June 22, said the new bank, which still alert bondholders to the risks associated with these securities with low liquidity.
Since the measure of resolution applied to BES in August 2014, “bond prices have been under pressure due to a number of factors have had and may continue to have a negative effect, “says the New Bank.
Among them, the institution highlights the” fears about the future prospects of the Portuguese economy and the state of the Portuguese financial sector “as well as its status as a” bank transition, uncertainty about the perimeter of the definition of assets and liabilities “and as the outcome of the sale process, whose term ends in August 2017, which may be already set this summer (the Bank of Portugal set until July which selling model of the institution, which may involve the sale to an institutional buyer or by the dispersion of capital stock, it is expected that the process start in August).
in addition, it is necessary to take into account the existence of “several disputes concerning the resolution of measurement and the transmission (or retransmission) of certain liabilities and the rating of the bonds,” says the tender offer memorandum.
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