BBVA has introduced a new issuance of subordinated Tier 2 bonds, raising billions of euros to strengthen its capital structure. These bonds offer a lower repayment priority compared to traditional bonds, meaning that in the event of liquidation, bondholders will be repaid only after other creditors have been satisfied.
The newly issued Tier 2 bonds have a six-year payback option, allowing BBVA to repay investors within twelve years at its discretion. The market’s response to the offering has been overwhelmingly positive, with demand exceeding €3 billion—three times the initial issuance volume. This strong investor interest led to a price reduction, with the final price set at “mid swap” + 200 basis points, down from the initial guidance of “mid swap” + 225 basis points.
This transaction is not only BBVA’s largest bond issuance of the year but also one of the most significant in the financial sector in 2024. It reflects the bank’s ongoing efforts to optimize its capital structure in line with its strategic financial plan.
The issuance was managed by a consortium of banks, including BBVA (as bookrunner and dealer), along with ING, JP Morgan, UBS, and UniCredit. BBVA has been particularly active in the bond market throughout the year, completing six notable debt issuances. These include a €1,750 million bond, multiple €1,000 million bonds, a €1,250 million Tier 2 subordinated bond, and a €1,000 million senior green bond. Additionally, BBVA issued a €750 million convertible bond, also known as a CoCo or AT1 bond.
The success of this Tier 2 issuance underscores BBVA’s ability to attract strong investor confidence, as well as its effective management of debt instruments to bolster its financial position.