Commerzbank to exchange €134.38 million 2019 notes for new 2027 notes

By Marisa Wong

Morgantown, W.Va., March 14 – Commerzbank AG announced it has accepted for exchange €134,378,000 of its existing €1,253,629,000 6.375% subordinated tier 2 notes due 2019.

The bank will issue €148.9 million of new 4% subordinated notes due 2027 in exchange for the old notes, according to a notice on Tuesday.

Commerzbank launched the exchange offer on March 7. The offer ended at 6 a.m. ET on March 14, and pricing was set at 9 a.m. ET the same day.

The exchange price is 112.65, and the new notes issue price is 101.632, resulting in an exchange ratio of 1.108411.

To calculate the exchange ratio, Commerzbank divided the exchange price at which the existing notes were accepted by the issue price for the new notes. The exchange price was set to reflect a yield to maturity on the existing notes equal to the exchange spread of 18 basis points and the interpolated mid-swap rate. For the issue price of the new notes, Commerzbank used a new issue spread of 291 bps.

The interpolated mid-swap rate for the existing notes is negative 0.095%, and the interpolated mid-swap rate for the new notes is 0.888%, according to the notice.

As previously announced, the new notes will qualify as tier 2 instruments and will mature on March 30, 2027. They will be an add-on to an existing €500 million series of notes issued on Jan. 16.

Settlement is slated for March 17.

Commerzbank said before that it is carrying out the exchange “to efficiently manage its tier 2 capital in light of prevailing market conditions.”

Commerzbank AG (+49 69 136 59920 or liability.management@commerzbank.com), Merrill Lynch International (+44 20 7996 5420 or dg.lm_emea@baml.com) and UBS Ltd. (+44 20 7568 2133 or ol-liabilitymanagement-eu@ubs.com) are dealer managers. Lucid Issuer Services ltd. (+44 20 7704 0880 or commerzbank@lucid-is.com) is exchange agent.

Commerzbank is a Frankfurt-based commercial bank.

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