Spain’s ACS Joins Banco Popular Delaying Bonds on VolatilityKatie Linsell and Alastair Marsh
Banco Popular Espanol SA said it postponed a planned issue of the riskiest bank debt because of “heightened volatility” in credit markets. Actividades de Construccion & Servicios SA also delayed a sale.
Conditions are “not conducive for primary issuance and subsequent secondary stability at this time,” the Madrid-based lender said, while the Spanish builder known as ACS cited adverse market conditions when it delayed its sale. Goldman Sachs Group Inc. also pushed back an issue of triple-recourse bonds.
Europe’s bond and stock markets are being roiled by concerns that Portugal’s Banco Espirito Santo SA will become embroiled in the troubles of related companies, one of which has failed to repay short-term debt. The cost of insuring corporate bonds against default rose for a fifth day, with a gauge of credit-default swaps on 125 companies climbing to the highest in a month, according to data compiled by Bloomberg.
Banco Popular was marketing benchmark-sized contingent convertible additional Tier 1 notes in euros to yield 7 percent to 7.25 percent, according to a person familiar with the matter. The lender’s 11.5 percent AT1 notes issued in October fell 1.4 cents on the euro today to 118 cents, the biggest decline since January, Bloomberg data show.
The average yield on contingent capital securities rose seven basis points yesterday to 6.27 percent, the highest since May, according to Bank of America Merrill Lynch index data. The securities help lenders meet new capital regulations because they are designed to shift the cost of rescuing banks from taxpayers to investors.
ACS was planning to issue 500 million euros ($680 million) of five-year notes yielding about 3.5 percent, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it. A Madrid-based spokesman for ACS declined to comment on the postponed transaction.
Goldman Sachs has delayed a planned inaugural issue of a new type of bond that offers investors three levels of protection on the event of default, according to a person familiar with that matter. The 1 billion euros ($1.3 billion) of AAA rated notes due to be sold through special purpose entity FIGSCO Issuer Ltd will not be sold until September, the person said.
Sophie Ramsay, a spokeswoman for Goldman Sachs in London, declined to comment on the financing.