BBVA’s Tier 1 Deal Fuels CoCo Bond Sales as Borrowing Costs Fall

Banco Bilbao Vizcaya Argentaria SA is marketing its second sale of contingent convertible bonds as demand for high-risk debt pulls down borrowing costs.

The Spanish lender plans to issue 1.5 billion euros ($2 billion) of additional Tier 1 notes in euros that will be priced to yield 7 percent, according to a person familiar with the deal. The average yield on CoCos, which are written off or convert to equity if a lender’s core capital falls below a preset level, declined 15 basis points this year to 6.83 percent, according to Bank of America Merrill Lynch’s High Yield Contingent Capital Index.