UniCredit To Complete Cash Call In Time For Bond Payouts

One America News Network | 8/18/2014 | Staff
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MILAN (Reuters) – The chief executive of Italy’s biggest bank UniCredit vowed on Thursday to complete a 13 billion euro ($14 billion) share issue by March 10, in time to make payouts due on some high-risk bonds that came under pressure on the market.

UniCredit’s shareholders meet on Thursday to approve the country’s biggest cash call to help the lender clean up its balance sheet and restructure under Jean Pierre Mustier.

New - CEO - Mustier - Plan - Month

New CEO Mustier detailed a plan last month to offload 17.7 billion euros in bad loans and cut 14,000 jobs. The bank said then that it would book 12.2 billion euros in one-off charges in the last quarter, with loan-loss provisions accounting for two thirds of the total.

In a statement on Thursday, issued at the behest of market regulator Consob, UniCredit said that fourth-quarter charges could make it difficult for the bank to pay coupons on so-called Additional Tier 1 (AT1) bonds due in March if it does not carry out the share issue.

Comments - UniCredit - AT1 - Issues - GMT

The comments weighed on UniCredit’s outstanding AT1 issues. By 0954 GMT (4:54 a.m. ET) the 8 percent bond on which the coupon payment is due yielded 9.5 percent, slightly higher on the day but below a session high of 9.7 percent. A 6.75 percent AT1 bond yielded 8.6 percent, up from 8.3 percent at the close on Wednesday.

AT1 instruments convert into shares if a bank’s core capital falls below a...
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