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Barclays sets 8.25% guidance on new AT1 bond

Anthony Rodriguez
Wednesday, 13 Nov 2013 | 10:12 AM ET

Nov 13 (IFR) - Barclays set guidance at 8.25% on its new high-risk Additional Tier 1 contingent capital (CoCo) bond offering on Wednesday, which was expected to price later in the day.

Buy-side sources said the initial price thoughts of 8% area had brought in about USD4.5bn of orders by late Tuesday.

Some market participants had expected Barclays to price somewhere between 7.5% and 8.00% for a deal size in the region of USD1bn to USD2bn.

Barclays has priced two CoCo deals in the last 12 months, but this is the first test of investor appetite for a security that is perpetual and has optional coupon payments.

"The big worry for this transaction and ones like it is the coupon deferral risk," said Dierk Brandenburg, a senior bank credit analyst at Fidelity.

Barclays is raising the capital as part of a plan to boost its leverage ratio, a measure of risk that regulators have recently brought into focus.

Barclays is sole bookrunner on the deal, with joint leads Citi, Deutsche Bank, Goldman Sachs, SMBC, UBS and Wells Fargo.

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