Bank Hapoalim (TASE: POLI) has completed the institutional phase of the offering of two series of contingent convertible notes (CoCo). One of the bonds matures in 25 years, the longest term yet for debt issued by the bank.
The total amount raised at the institutional stage amounts to 640 million shekels. The bank is raising two series of CoCo bonds (12 and 13), the first maturing in 2049, with the possibility of early repayment after twenty years. The demand for these bonds at the institutional stage amounted to 557 million shekels, of which the bank filled 310 million shekels.
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The second bond is for thirteen years, with the possibility of early repayment after eight years. The demand for these bonds amounted to 850 million shekels, of which the bank paid 330 million shekels. The release will be completed and released to the public tomorrow (Thursday).
Both bonds are linked to the index. Under the terms of the offering, the maximum interest rate on the first bond, Series 12, is 3.45%, and on the second bond, Series 13, is 3.88%. It is likely that a lower interest rate will actually be set, given demand. Bank Hapoalim said: “The size of the order and the length of the series express the great confidence that the bank enjoys among investors, as well as the opportunities available in the local market in the coming decades.”
Banks began issuing conditional convertible bonds in 2008, when banks in the West (but not in Israel) found themselves in a severe liquidity crisis, and it was decided to build a mechanism to collect debt that could be converted in moments of crisis into conditional convertible bonds. Part of the bank’s capital, thus enhancing its liquidity. If the debt is not converted, these instruments behave like regular bonds.
In the case of the current offering, the CoCo Bonds will become part of Bank Hapoalim’s Tier II capital. The aim of the offer is to enable the bank to grow its activity.
The offering was led by Leader Capital Markets.
Published by Globes, Israel Business News – en.globes.co.il – on November 27, 2024.
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