Popular Bond Wipe-Out in Shareholder Hands: Corporate Finance
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Banco Popular Espanol SA’s bondholders are counting on the Spanish lender’s equity investors rescuing them from being wiped out on $6.4 billion of junior debt.
The bank wants to raise as much as 2.5 billion euros ($3.2 billion) in shares to avoid seeking state aid that would trigger losses on subordinated bonds under European Union rules. Popular’s 5.702 percent junior notes due 2019 rose 15.8 percent in the past month to 7O cents on the euro, according to Bloomberg prices, compared with an average 1.93 percent increase for securities in the Bank of America Merrill Lynch Euro Financial Subordinated & Lower Tier-2 Index.