Barclays Bank is embarking on a global roadshow to present its contingent capital (CoCo) structure to investors in what could be the first issue of its kind from a UK borrower. Barclays will meet investors in the US over the course of three days, with bankers on the deal hopeful that institutional investors there will drive momentum.
Barclays will also meet accounts in Switzerland and Hong Kong as well as throughout Europe. If Barclays is successful, bankers expect that the door will open quickly to allow other banks to bolster their balance sheets with a form of debt capital that can be quickly converted into equity when the bank comes under stress. Global regulators have said CoCos would not count as core capital and failed to lay out clear standards for them, leaving it up to national regulators to determine how far banks could use them.
Swiss banks were specifically asked by their regulator to raise contingent capital, and have made much of the running in developing CoCos. Credit Suisse targeted mainly retail investors and private banks, and received a strong reception for a USD2bn 30-year non-call 5.5 Tier 2 transaction in February 2011 that was more than 10 times subscribed and priced at 7.875%.
More recently, UBS went a step further and sold the first bank capital instrument with permanent write-down features to US institutional investors. The USD2bn 10 non-call Tier 2 offering priced at 7.625% or 598bp over US Treasuries, and tightened by nearly 150bp in the secondary market, according to Tradeweb. The roadshow will commence Tuesday, November 6, with Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley acting as joint bookrunners and Barclays' investment banking arm acting as global co-ordinating bookrunner and structuring advisor.