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CaixaBank May Swap $6.4 Billion of Bonds to Boost Capital

CaixaBank SA will issue as much as 4.9 billion euros ($6.4 billion) of bonds in an exchange for preference shares to help Spain’s fourth-biggest lender raise capital.

The issues of as much as 1.47 billion euros of mandatory convertible bonds and 3.43 billion euros of subordinated bonds will be aimed exclusively at holders of preference shares who accept Caixabank’s offer to buy those securities back at 100 percent of their nominal value of 1,000 euros, the Barcelona- based lender said in a regulatory filing late yesterday.

CaixaBank is following Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA) in raising capital with offers to exchange preference shares. CaixaBank’s capital shortfall in September under European Banking Authority criteria was 630 million euros, the bank said earlier this month.

CaixaBank will offer holders of its A and B series preference shares 300 euros in cash and seven subordinated bonds with a 4.06 percent coupon. Holders of its series 1/2009 preference shares will receive 300 euros in cash and seven subordinated bonds carrying a 5.095 percent coupon, the bank said.

As a condition of the offer, investors must subscribe to three mandatorily convertible bonds for every preference share that CaixaBank repurchases. Half of the bonds will convert to shares of CaixaBank on June 30, 2012, with the remainder converting a year later, the lender said.

To contact the reporters responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net; Charles Penty at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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