Belfius has launched a €500m inaugural Perpetual Additional Tier 1 bond targeted to institutional investors. The product, which was issued on January 25, bears a semi-annual discretionary non-cumulative coupon of 3.625% until the first call date on April 16, 2025 and includes a temporary write-down loss absorption mechanism. The instruments will be listed at Euronext Brussels.

On January 18, 2018, Belfius published its intention to issue an Additional Tier 1 transaction and the bank mandated joint bookrunners Bank of America Merrill Lynch, Belfius Bank, Citigroup, JP Morgan, Nomura and UBS Investment Bank to arrange a series of European investor meetings commencing on January 22. During a three days roadshow which took the bank to London, Paris, Frankfurt, the Netherlands and Brussels, Belfius met more than 140 investors.

Belfius announced from the start that the amount of the envisaged transaction was €500m, according to a spokesperson for the bank. "During the roadshow, Belfius felt already the good interest of the investors for the Belfius credit and in particular for this transaction," the spokesperson said.

The book grew rapidly to more than €4bn, eight times the size of the envisaged issue, and the demand from the investment community allowed Belfius to price the deal at a coupon of 3.625%. "The [Additional Tier 1] instruments were only targeted to eligible counterparties and professional clients, they were not offered to retail investors," said the spokesperson who added that at this moment Belfius has no concrete plans to issue another AT1 transaction.

The transaction has been subscribed by more than 280 investors with various investment profiles and include asset managers (59%), banks and private banks (15%), insurance and pension funds (13%), hedge funds (10%) and corporates (3%).

The investor base is located mainly in the UK (43%) followed by France (18%), Germany/Austria (9%), Southern Europe (6%), the Netherlands and the Nordics (each 5%) and Switzerland and Belgium (both for 3%) and others (8%).

The European Central Bank (ECB) requires Belfius to maintain, for 2018, on a consolidated and solo level a total supervisory review and evaluation process (SREP) capital requirement (TSCR) of 10.25% which includes the minimum own funds requirement of 8% to be maintained at all times and an own funds requirement of 2.25% to be held in excess of the minimum own funds requirement.

On a fully loaded basis (i.e. from 2019 onwards due to phasing in of the capital conservation buffer and all other elements remaining equal), the minimum Common Equity Tier 1 (CET1) ratio requirement, the minimum Tier 1 ratio requirement and the total capital requirement for Belfius are 10.75%, 12.25% and 14.25%, respectively. As at June 30, 2017, Belfius' consolidated phased in CET1 ratio stood at 16.3% and phased in total capital ratio at 19.1%. On a solo basis phased in CET1 ratio stood at 16.2% and phased in total capital ratio at 19.0%.

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