BBVA concludes a brilliant year in the capital markets

At the end of September 2017, the BBVA group published an update of its presentation intended principally for fixed-income analysts and investors. Among other things, the presentation underscores the positive results of the debt issues this year and includes the plan for issuances in 2018.

During 2017, the bank achieved several milestones in the capital markets. With the year just begun, it launched an issue of five-year senior debt bonds for $1 billion, with the lowest coupon in history for this maturity and this type of product by a Spanish issuer. After that, in April, BBVA announced the successful placement of €1.5 billion five-year preferred senior debt. The high demand allowed the price to be cut to very competitive levels, without an issue premium.

But the bank´s activity has not been limited to this type of debt. In February, BBVA issued €1.5 billion of Tier 2 (€1Bn public and 0.5Bn on private deals). Once Spanish legislation allowed the issuance of Senior Non-Preferred debt by Spanish banks, BBVA placed €1.5 billion of these instruments, at the best price obtained in Europe up to that time. And, in spite having completely covered the cushion of 1.5% of Additional Tier 1 Capital that can be computed with Cocos, BBVA made two incursions into this market. One took place in May, a private issue that entered the market with €500 million at the best price obtained by a Spanish issuer up to that time. The second, only a few days ago, was for $1 billion, with the longest term and the best price achieved by an issuer in southern Europe up to that date.

As for 2018, the bank plans to refinance the maturities not eligible under European norms with Senior Non-Preferred debt.

The fixed-income presentation, updated through the end of September, also includes other relevant financial information about BBVA. The document is divided into seven chapters:

1. The first chapter contains a summary of the principal strengths and the most outstanding aspects of BBVA from January to September 2017: the growth of recurrent income, cost control, an increase in profits, strong capital and liquidity ratios and the acceleration of the bank´s transformation process.
2. The second chapter puts special emphasis on the balanced diversification of BBVA’s business, which has franchises with great growth potential in strategic developing and emerging markets where the Group holds leading positions.  The chapter also shows the outstanding aspects of the results and the activity of the last nine months in each of the Group’s principal business areas.
3. The next chapter has to do with credit quality. It refers to BBVA’s risk profile, which is based on prudence and pro-activity. This is reflected in the good performance of indicators such as the ratio of non-performing loans and the risk premium.
4. As for solvency, the fourth chapter provides an itemized breakdown of the group´s capital position (with ratios that easily surpass the regulatory requirements), its capacity for capital generation (supported by the high degree of recurrence in the bank’s results) and its high quality. Likewise, it refers to the recent issue of Coco bonds for $1 billion.
5. The fifth chapter, based on the de MREL (‘Minimum Required Eligible Liabilities’), requirement, explains the new regulation, which was approved last June, regarding the issuance of Senior Non-Preferred Debt (SNP) by Spanish banks. It likewise describes the first issue of SNP, which BBVA carried out at the end of August. The chapter also includes BBVA’s aforementioned plans to issue this type of instrument.
6. Other key indicators for the fixed income market are those related to liquidity, which are covered in the sixth chapter of the presentation. BBVA´s business model is characterized by decentralization: self-sufficient franchises without transfers of liquidity between the parent company and the subsidiaries, or between subsidiaries. The presentation also underscores the comfortable liquidity position of BBVA, which has Liquidity Coverage Ratios (LCRs) above the regulatory minimum in the principal geographic areas where it operates. On the other hand, BBVA´s nature as a retail bank is reflected in the high percentage of deposits in its sources of financing, which reduces the bank´s dependence on wholesale markets. In addition, the Group has ample access to the principal capital markets where it is present. Finally, the chapter details the ratings given to the bank by the principal agencies.
7. To conclude, the presentation shows the acceleration that the Group´s transformation has undergone during the last year. On the one hand, it details the evolution of digital clients and sales (the latter both at a global level and broken down by areas) of the BBVA Group. In addition, it focuses on BBVA Spain, where this process is taking place in a significant manner. One example are the new consumer credit operations made through digital channels, which increased by 64%, year on year.