Bloomberg News

Santander Investors Agree to Swap Fewer Bonds Than Sought

November 24, 2011

(Adds reason for bond exchange in first paragraph.)

Nov. 24 (Bloomberg) -- Banco Santander SA said investors agreed to exchange less than 20 percent of the subordinated debt it was offering to swap for senior securities at a discount to help bolster capital.

Spain’s largest bank said it will issue 1.34 billion euros ($1.8 billion) of senior bonds in euros and pounds maturing Dec. 1, 2015, out of the total 6.8 billion euros it offered to swap, according to a statement. The benefit to the bank’s capital ratios will be announced when the transaction settles, Santander said.

Santander has the right and not the obligation to redeem all the so-called Lower Tier 2 subordinated notes early. The bank said when the exchange was announced that it will decide whether to exercise the call solely on economic grounds, a move analysts including Hank Calenti at Societe Generale SA in London said may hinder its access to capital markets.

The bank’s issue of new senior debt comprises 1.12 billion euros of 3.381 percent bonds and 189.8 million pounds of 3.16 percent securities, it said today.

--Editors: Andrew Reierson, Paul Armstrong

To contact the reporters on this story: John Glover in London at johnglover@bloomberg.net; Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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