BBVA successfully issues $1 billion of AT1 debt with the lowest spread recorded by a southern European bank
On Tuesday, BBVA issued a contingent convertible (CoCo or AT1) bond in the amount of $1 billion dollars, with an early redemption option in seven years. The operation kicks off the 2025 debt market, making BBVA the first EU bank to issue debt in this format this year. With this transaction, the bank is reinforcing its ability to diversify sources of funding.
The high demand, which reached an order book of €5.7 billion, made it possible to reduce the coupon from the initial 8.25 percent to the final 7.75 percent, which represents a new issuance premium of zero. The final coupon has a spread of 325 basis points over the U.S. Treasury bonds (UST), the lowest ever achieved by a southern European bank in an AT1 issuance.
The issuance is in SEC format, with a prospectus registered with the U.S. Securities and Exchange Commission. This format allows BBVA to gain access to a broader investor base, reaching investors in the U.S., Europe and Asia.
In this regard, the issuance stood out for its significant geographic diversification with notable demand from the U.S. and Asia. Furthermore, investor quality was excellent, with a high presence of buy and hold investors.
This latest operation confirms the investor community’s confidence in BBVA and in a hybrid instrument with an equity component like the AT1. The issuance is part of the bank’s wholesale funding plan for 2025 and aims to strengthen AT1 hybrid capital.
The bookrunners included BBVA, Barclays, Bank of America, Citi, HSBC and JP Morgan. BBVA’s most recent issuance of CoCo bonds in dollars was in September 2023. BBVA also issued CoCo bonds worth €750 million in June 2024.
This marks BBVA’s first debt issue in 2025. In 2024, the bank issued debt a total of six times, in addition to the CoCo bond issue mentioned earlier. In August, BBVA placed €1 billion of subordinated Tier 2 debt; in May, it issued senior preferred debt in two tranches, with a volume of €1.75 billion; and in March the bank carried out a double senior preferred and non-preferred debt issue in the amount of $1 billion each. In January 2024, BBVA issued €1.25 billion of subordinated Tier 2 debt; €1.25 billion of senior preferred debt; and a senior preferred green bond in the amount of €1 billion.