Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Rabobank Nederland to Sell Hybrid Contingent Notes

Rabobank Nederland Said To Plan Sale Of Loss-Absorbing Notes
Rabobank Nederland is selling undated subordinated bonds in dollars that have the capacity to be written down if the lender’s capital falls below a certain threshold. Photographer: John Guillemin/Bloomberg

(Corrects description of bonds as senior securities in story published Jan. 17.)

Jan. 17 (Bloomberg) -- Rabobank Nederland, Europe’s biggest agricultural lender, is selling undated subordinated bonds that can be written down if its regulatory capital requirements fall below a preset threshold.

The perpetual Tier 1 notes in dollars, which can be repaid after 5 1/2 years, lose money if Rabobank’s consolidated equity capital ratio falls below 8 percent, according to Rogier Everwijn, the Utrecht, Holland-based lender’s head of long-term funding. The company last year issued 1.25 billion euros ($1.66 billion) of 6.875 percent senior notes due 2020 that can be written down by 75 percent and repaid immediately in a crisis.

Rabobank is selling debt securities that have tax advantages over equity, as well as loss-absorbing features that allow the issuer to treat them as capital. Regulators are pushing banks to issue this type of debt after existing so-called hybrid bonds failed to absorb losses during the 2008 financial crisis.

The bank, which has the top credit ratings from Moody’s Investors Service and Standard & Poor’s, had a Tier 1 ratio of 13.5 percent as of June last year and would have to lose 12.3 billion euros to trigger the writedown, according to Everwijn. The securities are written down rather than converting to equity because Rabobank doesn’t have publicly traded stock, he said.

The securities, which can be written down more than once, can’t be written up. Interest payments are optional and don’t accumulate and the bank isn’t allowed to make them if it doesn’t have the money, if regulators veto payment on its other securities, or if it breaches capital requirements.

Bank of America Corp., Credit Suisse Group AG, Morgan Stanley and Rabobank are managing the sale of the notes, the people said.

To contact the reporter on this story: John Glover in London at; Esteban Duarte in Madrid at

To contact the editor responsible for this story: Paul Armstrong at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.