Fixed income market

BBVA tapped the market today with a euro-denominated contingent convertible (known as a CoCo or AT1) bond, attracting demand of €3.5 billion. The issue price was set at 6.875 percent, well below the 7.375 percent starting price.

BBVA, together with Bank of America Securities and Citigroup Capital Markets, led Ecopetrol’s new issuance of corporate debt in the U.S. market in the amount of $1.85 billion. This placement consolidates BBVA’s role as one of the top financial institutions in the structuring, placement and sale of corporate bonds.

BBVA kicked off 2020 with a €1.25 billion non-preferred 7-year bond issue, the year’s first by a Spanish bank. The bond received a warm welcome from investors and was two-times oversubscribed, with demand exceeding €2.6 billion and drawing a high-quality order book. All this enabled BBVA to price the bond at 70 basis points over mid swap, compared to the initial guidance of 90 basis points.

The green bond BBVA issued in May 2018 has helped reduce CO2 emissions by 274,609 tons since its launch in May 2018, with another 106,539 tons estimated for 2019. It also generated 558 GWh/year of renewable energy. The bank has allocated one billion euros obtained from wholesale markets to finance renewable energy and sustainable transportation projects, according to the first bond monitoring report the BBVA Group recently published.

BBVA has issued a €1 billion contingent convertible bond (CoCo), which saw a demand of more than  three times the initial offer and received more than 250 orders. The high demand for the issue made it possible to set the final coupon rate at 6 percent, 0.375 points below the initially indicated price (6.375 percent).

BBVA has issued a €750 million 10-year Tier-2 subordinated bond.  A high demand of €4.25 billion – with 260 orders – exceeded by more than five times the bond value, making it possible to reduce the mid swap price +245 basis points, 30 basis points below the initial price. The order book closed in only three hours. The issue achieved the lowest 'spread' of a subordinated issue for BBVA since 2007.

BBVA has issued a €1 billion contingent convertible bond, or CoCo, (Additional Tier 1 or AT1) with a coupon of 5.875 percent, equaling its lowest-ever rate for this type of issue. High demand has allowed it to reduce the coupon by 50 basis points, from the initial 6.375 percent. This is a perpetual instrument (without a specific maturity date) over which the issuer reserves a call option in the fifth year.

Following the recent rating upgrades from S&P and DBRS, Moody’s today upgraded BBVA’s rating to A3, from Baa1. After this action, BBVA achieves again a category A rating with all agencies.

BBVA considers that it is currently in compliance with the MREL requirement, which today was notified by the Bank of Spain. BBVA also considers the possibility of refinancing the future maturities of senior debt and covered bonds (€6.5 billion through 2020) issuing MREL eligible liabilities. This issuance volume is very manageable.

S&P has upgraded BBVA’s long-term debt rating to A- from BBB+, a level the institution had not achieved since early 2012. The agency underscored the strength of BBVA’s franchises in the countries in which it operates, aiming at strengthening profitability while pushing for digitalization.

BBVA has teamed up with several global banks to become a member of the Standard Repackaging Documentation platform (SRD). This initiative is a response to investors’ demands for standardization of repackaging transactions. BBVA is the only Spanish bank involved.

Market analysts reported positively on BBVA’s 2017 results. The majority pointed to the solid underlying trends, the strength of recurring revenues and cost containment as the key drivers of the bank’s solid performance.

The BBVA Group’s activity in the capital markets during 2017 has been nothing less than brilliant after having completed its latest issue of CoCo bonds in November.  During 2018, BBVA hopes to refinance the maturities of issues that are not eligible under EU norms, with Senior Non-Preferred debt. You can find all the information in the latest fixed income presentation.

The BBVA Group takes another step forward in its digital transformation and in improving customer experience, with a new website for shareholders and investors. The site includes new content and the latest trends in browsing, and is accessible from any mobile device.

Market analysts have given positive reviews to BBVA’s third quarter 2017 results, which in many cases surpassed prior forecasts. In their reports, the analysts underscored the performance of expenditures and provisions below forecasts. BBVA´s businesses in Spain, Turkey and South America all surprised analysts with their good performance. 

The European Commission has published a legislative proposal to create a sort of European Securities and Exchange Commission – that is, a European agency that would centralize some of the stock exchange supervision competencies of the national authorities. Once it is approved, part of the activity that takes place on the European exchanges would come under control of the new European authority.

The country risk premium is the return that investors demand from a country to buy its sovereign bonds in comparison with that demanded from other countries. It is calculated as the difference between the interest rate of a country’s bonds compared to bonds issued by a benchmark country, considered "riskless."

Credit ratings are estimates that gauge the ability of a company, public administration or financial product to meet their financial commitments. In many cases they are taken as key indicators in capital markets when making investment decisions.

Speaking this morning at the 22nd annual meeting organized by Bank of America Merrill Lynch in London, Chief Financial Officer Jaime Sáenz de Tejada explained some of the key aspects BBVA’s strategy to investors.  "BBVA is well positioned for the new growth cycle", thanks to a solid balance sheet and capital position, as a result of the company’s efforts in recent years, its geographic diversification and forward-looking transformation strategy.

BBVA Group has published the June 2017 update of its presentation aimed mainly at analysts and fixed-income investors. The key new point is the incorporation of the 2017-2018 issuance plan for senior non-preferred debt. BBVA plans to issue up to €4.5 billion of this type of instrument this year and next.

BBVA has issued €1.5 billion at 5 years, at fixed interest. It is its first issue of senior non-preferred debt, a new category of liability with the capacity to absorb losses, that allows financial institutions in the European Union to comply with MREL requirements. The issue has been a success, with demand of around €5 billion, allowing it to close with the lowest price in Europe at this maturity, 70 basis points above the mid-swap rate, and a coupon of 0.75%.

Garanti Bank signed an agreement with the European Bank for Reconstruction and Development (EBRD) for 5-year term funding in the amount of Euro 75 million equivalent under the Covered Bond Programme. Thanks to this financing, the first transaction settled with EBRD in TL and covered bond format, Garanti aims to boost the expansion of Green Mortgage loans and to protect the future generations with environmentally-friendly buildings.

This past 23 June, the Cabinet approved a new category of debt for issuance by all financial entities: senior non-preferred debt, which has the ability to absorb losses.

The BBVA Group released today a new presentation for fixed income analysts and investors. The presentation will be updated on a quarterly basis.  The document offers detailed information about BBVA Group’s fundamentals and strategy in a number of fields of relevance for the market, with a special focus on credit quality, as well as the BBVA Group’s liquidity and capital adequacy position.

BBVA Group garners excellent results in a number of categories of the prestigious Extel Survey’s 2017 edition.  Jaime Sáenz de Tejada named Spain’s best chief financial officer.

Moody´s ratings agency has confirmed its stable outlook for the Spanish banking sector. This reflects the agency´s view regarding the evolution of the sector over the next two years. Moody´s believes that GDP growth will allow financial institutions to continue improving their asset quality metrics, although at a slower pace than last year. Likewise, Moody´s expects that the profitability of the banks will be maintained throughout 2017-2018, since lower provisions will compensate for the pressure on margins due to low interest rates.

Customer deposits are the principal source of liquidity for retail banks. But they also go to the capital markets, through debt issues. In this way, the banks can obtain financing and also meet the requirements of an increasingly demanding regulation. Depending on their characteristics, these issues are more or less similar to shares, which means that they also have priority when losses are taken, in the event the financial institution were to go bankrupt

Rating agencies are private institutions whose main function is to assess the credit risk of a company or financial product through a series of ratings. These assessments are often used in capital markets as benchmarks for investment decisions.

BBVA on April 3 announced the successful placement of €1.5 billion five-year preferred senior debt with a floating coupon rate. High demand, about €3.25 billion, allowed the price to be cut to very competitive levels, without an issue premium. The order book closed in just two hours, drawing 260 international investors