by
Elizabeth Moran | Sep 12, 2012
RBS announced a buyback of 19 senior unsecured bond issues last week worth an equivalent £16.4bn. The rationale behind the move was that as RBS is selling off assets and liquidity is increasing, it no longer needed the debt. As at 30 June 2012 the bank had liquidity of £156bn, with ₤62bn in short term wholesale funding. Total wholesale funding was £213bn.
Importantly, RBS offered to buy the bonds back at a premium over recent trading levels (the bonds were typically trading above or at par). The move sent prices of other senior secured bonds tighter by around 30 to 40bps and the sentiment also increased some of the prices of Tier 1 securities.
The offer includes:
- Five GBP bonds totalling £3.9bn
- Five Euro of €5.6bn (the GBP and Euro buy-back has a combined limit of £2bn equivalent)
- Nine USD issues totalling $13.2bn (on an any or all basis)
Some of the bonds have high coupons (ranging from 3.4% to 7.5%), so the move will reduce interest expense.
RBS have a range of A$ bonds which have seen prices increase and credit spreads contract in recent months.
To find out more, please call your local dealer.