Barclays tallies early tenders, sets pricing for 6.05%, 5.14% notes

By Susanna Moon

Chicago, April 9 - Barclays Bank plc said holders had tendered $936 million of its 6.05% fixed-rate subordinated notes due 2017 and $242 million of its 5.14% lower tier 2 notes due October 2020 by 5 p.m. ET on April 8, the early participation date.

All of the notes tendered with a bid premium less than the clearing spread premium of 30 basis points were accepted for purchase, and all notes tendered with a bid premium equal to the clearing spread premium were accepted for purchase on a prorated basis using a proration factor of 89.68%, according to a company press release.

Barclays will purchase up to $850 principal amount of the notes in the modified Dutch auction tender offer for its $2.25 billion of 6.05% notes and $1.25 billion of 5.14% notes, as noted before. The offer began on March 26, and the cap was lowered from $1 billion on April 3.

The tender offer will end at 5 p.m. ET on April 25. The settlement date is expected to be April 9 for notes tendered by the early deadline and April 30 for notes tendered after that.

Pricing details

For each $1,000 principal amount, the total purchase price will be $1,137.21 for the 6.05% notes and $1,088.30 for the 5.14% notes. The tender offer yield is 2.877% for the 6.05% notes and 3.779% for the 5.14% notes.

Pricing was set using the yield of a reference Treasury security plus a clearing spread, which consisted of a base spread less a clearing spread premium. The base spread was 250 bps for the 6.05% notes and 235 bps for the 5.14% notes, and the clearing spread premium was 30 bps for both note series.

The reference yield was 0.677% for the 6.05% notes and 1.729% for the 5.14% notes.

The acceptable bid spread range was 210 basis points to 250 bps for the 6.05% notes and 195 bps to 235 bps for the 5.14% notes.

The reference Treasury is the 0.75% Treasury due Feb. 28, 2018 for the 6.05% notes and the 2% Treasury due Feb. 15, 2023 for the 5.14% notes. The reference yields were set at 2 p.m. ET on April 8.

The company will also pay accrued interest up to but excluding the payment date.

The purchase price will include a $50 early participation amount for each $1,000 principal amount of notes tendered by the early participation deadline.

More offer terms

As the principal amount of notes tendered by the early deadline was more than $850 million, the company first accepted all notes tendered with a bid spread that resulted in a bid premium less than the clearing spread premium and then all notes with a bid spread that resulted in a bid premium equal to the clearing spread premium on a prorated basis using a single proration factor across both series of notes.

Holders who tendered their 5.14% notes by the early participation deadline and whose notes are accepted will not receive the regularly scheduled interest payment scheduled for April 14, as noted before.

The tender offer is conditioned on financing.

The dealer manager is Barclays (212 528-7581, 800 438-3242 or liability.management@barclays.com). The tender agent is Global Bondholder Services Corp. (212 430-3774, 866 470-4200 or Info@gbsc-usa.com).

The unit of Barclays plc is based in London.

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