Nordea Bank Abp has agreed to pay a significantly higher interest rate on a new capital bond compared to a similar issuance four years ago, reflecting a changed rate environment for lenders.
The Nordic bank said Wednesday it priced $850 million of Additional Tier 1 notes with a coupon of 6.75%.
That compares with a 3.75% coupon on a $1 billion U.S. dollar-denominated AT1 bond the bank sold in August 2021.
The new rate is also slightly above the 6.625% coupon on a similar bond issued in 2019.
AT1 bonds are a form of debt that can be converted into equity if a bank's capital levels fall below a predetermined threshold, helping to bolster its financial cushion.
Nordea said the issuance is part of its ordinary capital management and is intended to maintain its strong capital position while taking advantage of favorable market conditions.
The new perpetual bonds have a first call date in November 2033, and the offering is expected to be settled on Sept. 10, according to the company.
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