Post by saxouk on Apr 17, 2015 14:33:12 GMT
Saxo Turns to CoCos to Fill Capital Hole From Swiss Losses (1)
Wednesday, April 15, 2015 13:49
by Frances Schwartzkopff
(Updates to add Saxo AT1 CoCo pricing in seventh paragraph.)
(Bloomberg) -- Saxo Bank A/S is filling a capital hole stemming from losses on the Swiss franc by offering 12 percent on its contingent convertible debt.
The Danish broker bank is tapping one of the riskiest bank-debt markets after losing as much as $107 million when Switzerland abandoned its exchange-rate cap on the franc in January. The debt sale means Saxo will now be able to meet its capital targets, according to Steen Blaafalk, chief financial officer.
“We had already said last year that we had a capital plan to reach above 20 percent,” Blaafalk said in a phone interview. “We did build up good capital in the second half of last year. Then unfortunately we had the incident with the Swiss central bank.”
Saxo plans to use the additional capital to expand its balance sheet and says the bank is attracting more clients even after some customers criticized it for its handling of franc trades back in January. Saxo faces lawsuits from clients who lost money trading Swiss franc, Blaafalk said at the time.
“We can now allow ourselves to take more clients in and to take more activity from each client,” Blaafalk said. “We can now be a little bit more aggressive and competitive.”
CarVal Investors
The bank sold 10-year 12 percent convertible Tier 2 notes for 46.25 million euros ($49 million), it said on Tuesday. Taking the note’s issue price into account, the effective rate was 13 percent, Saxo said. The CoCo is callable after five years. Saxo also sold new equity capital for 31.25 million euros. The buyer is CarVal Investors, which will hold a 2.5 percent stake in the bank after the transaction.
The issuance follows the sale last year of an Additional Tier 1 CoCo with a coupon of 9.75 percent. The bid yield to maturity of the security was 10.46 percent at 1:34 p.m. in Copenhagen. The yield shot up from below 10 after Switzerland abandoned its cap in January.
Blaafalk said Saxo’s Swiss franc losses haven’t damaged its business.
“We thought that could be a risk in the early part of the crisis, but it turned out not to be,” he said.
Wednesday, April 15, 2015 13:49
by Frances Schwartzkopff
(Updates to add Saxo AT1 CoCo pricing in seventh paragraph.)
(Bloomberg) -- Saxo Bank A/S is filling a capital hole stemming from losses on the Swiss franc by offering 12 percent on its contingent convertible debt.
The Danish broker bank is tapping one of the riskiest bank-debt markets after losing as much as $107 million when Switzerland abandoned its exchange-rate cap on the franc in January. The debt sale means Saxo will now be able to meet its capital targets, according to Steen Blaafalk, chief financial officer.
“We had already said last year that we had a capital plan to reach above 20 percent,” Blaafalk said in a phone interview. “We did build up good capital in the second half of last year. Then unfortunately we had the incident with the Swiss central bank.”
Saxo plans to use the additional capital to expand its balance sheet and says the bank is attracting more clients even after some customers criticized it for its handling of franc trades back in January. Saxo faces lawsuits from clients who lost money trading Swiss franc, Blaafalk said at the time.
“We can now allow ourselves to take more clients in and to take more activity from each client,” Blaafalk said. “We can now be a little bit more aggressive and competitive.”
CarVal Investors
The bank sold 10-year 12 percent convertible Tier 2 notes for 46.25 million euros ($49 million), it said on Tuesday. Taking the note’s issue price into account, the effective rate was 13 percent, Saxo said. The CoCo is callable after five years. Saxo also sold new equity capital for 31.25 million euros. The buyer is CarVal Investors, which will hold a 2.5 percent stake in the bank after the transaction.
The issuance follows the sale last year of an Additional Tier 1 CoCo with a coupon of 9.75 percent. The bid yield to maturity of the security was 10.46 percent at 1:34 p.m. in Copenhagen. The yield shot up from below 10 after Switzerland abandoned its cap in January.
Blaafalk said Saxo’s Swiss franc losses haven’t damaged its business.
“We thought that could be a risk in the early part of the crisis, but it turned out not to be,” he said.