Bloomberg News

BBVA Sells First Spanish Senior Unsecured Bonds Since October

February 07, 2012

Feb. 7 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA is selling senior, unsecured bonds in the first benchmark offering of the debt from a Spanish bank since October.

The 2 billion-euro ($2.6 billion) offering of 18-month notes will yield 193 basis points more than the benchmark swap rate, according to a banker with knowledge of the matter. That’s less than the 250 basis points that BBVA, Spain’s second-largest bank, offered on similar-maturity notes it sold in October.

BBVA is selling the bonds as European policy makers pump cheap funds into the economy, fuelling demand for higher- yielding assets. The European Central Bank, which gave financial firms 489 billion euros of 1 percent three-year loans in December, will offer unlimited funding on Feb. 29 in its second longer-term refinancing operation.

“LTRO money is renewing the demand for peripheral issuers including for some senior unsecured debt,” said Phil Milburn, an Edinburgh-based fund manager at Kames Capital, which manages about 27 billion pounds of assets.

Telefonica SA, Spain’s largest phone company, is also selling bonds, seeking 1.5 billion euros from six-year bonds yielding 300 basis points more than the swap rate, according to a banker with knowledge of the deal. Madrid-based oil company Repsol YPF SA and Banco Espanol de Credito SA, a unit of Banco Santander SA, are also selling debt today, according to people familiar with the transactions.

BBVA’s 750 million-euro sale of unsecured debt on Oct. 28 was the last benchmark offering of the debt by a Spanish bank, according to data compiled by Bloomberg. A benchmark-sized deal is typically at least 500 million euros.

Barclays Capital, HSBC Holdings Plc, Natixis and Societe Generale SA are managing the sale of the new bonds for the Bilbao-based lender. BBVA is rated Aa3 by Moody’s Investors Service and one step lower at A+ by Standard & Poor’s and Fitch Ratings.

--Editors: Andrew Reierson, Michael Shanahan

To contact the reporters on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net; Ben Martin in London at bmartin38@bloomberg.net.

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


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