Societe Generale SA (GLE) said it postponed a sale of additional Tier 1 bonds because of the imminent publication of a ratings report.
“In recognizing the need for transparency with the market, Societe Generale has decided to delay the execution of its euro-denominated additional Tier 1 transaction,” Antoine Lheritier, a spokesman for the Paris-based bank, said in an e-mailed statement. “There is expected to be no potential impact on its fundamental assessment.”
Societe Generale began marketing the notes on March 24, offering a coupon of about 6.75 percent. The bonds “could be relaunched in the near future,” according to the statement. Issuance of additional Tier 1 notes, which can be written down or converted into stock if a lender’s capital ratio falls below a preset level, is surging as banks move to comply with new European regulations that aim to pass bailout costs to investors instead of taxpayers.
France’s second-largest bank was one of three lenders marketing the bonds this week amid the busiest month for issuance of the debt since the market opened a year ago. UniCredit SpA (UCG), Italy’s biggest bank, and Credit Agricole SA, the third-largest French lender, are both expected to price the securities this week.
Societe Generale’s $1.75 billion of 7.875 percent additional Tier 1 bonds issued in December fell as much as 0.24 cent on the dollar before rallying to $103.09, according to Bloomberg generic prices.
“I don’t think it’s necessarily anything negative,” said John Raymond, an analyst at CreditSights Inc. in London. “They might just have been advised to wait if they know a routine update is coming out.”
Societe Generale is rated A, the fifth-highest investment-grade rating, at Standard & Poor’s and Fitch Ratings and an equivalent A2 at Moody’s Investors Service. S&P has maintained a negative outlook on the company’s credit since October 2012 while the other two ratings firms see the bank’s outlook as stable.
European lenders have issued the equivalent of $13.9 billion of additional Tier 1 debt this month, almost half the amount sold since Banco Bilbao Vizcaya Argentaria SA debuted the first notes on April 26, according to data compiled by Bloomberg.
To contact the reporter on this story: John Glover in London at email@example.com