Barclays hits bond market with tender, TLAC deal

(UPDATES with pricing guidance)

By Will Caiger-Smith

NEW YORK, Aug 3 (IFR) - Barclays (LSE: BARC.L - news) is back in the US dollar bond market with its first deal since May, as it looks to meet capital requirements with both senior and subordinated debt.

The UK bank set guidance for a five-year senior holdco deal at T+215bp or tighter than T+220bp-225bp initial price thoughts.

Guidance for a tap of outstanding 5.2% May 2026 subordinated bonds was tightened to T+330bp vs IPTs of 340bp. Barclays is also offering five-year floaters.

The self-led deal will count towards the bank's Total Loss Absorbing Capacity (TLAC) requirement - new rules introduced last year that take effect from 2019.

At IPTs, Barclays looked to be offering a new issue concession of about 25bp on the holdco bonds, based on its 3.25% January 2021 holdco bonds trading at G+193bp on Wednesday.

The concession looked slightly higher at around 30bp on the tap, based on the T+310bp trading level on the outstanding 2026s.

Those subordinated bonds were issued in May - the bank's last foray into the US dollar market.

Barclays has to raise GBP33bn (US$43.9bn) of loss-absorbing debt by 2022, or GBP6bn (US$7.9bn) per year, according to its latest fixed-income investor presentation.

One option for banks looking to meet TLAC needs is to sell holdco debt which can absorb losses when they fail.

Barclays is therefore also retiring old debt that does not count towards its capital needs and has launched a tender for operating company debt in euros, sterling and US dollars.

"Non-TLAC debt has only funding value but [Barclays has] liquidity to be able to sweep it up," said a person close to the transactions.

"It makes sense to do this together with a new issue," the person said, noting that the transactions were nevertheless being run separately.

Swiss bank UBS (LSE: 0QNR.L - news) was also in the market Wednesday with a 5.5-year 144a/Reg S fixed and floating senior holdco deal.

Guidance on the fixed rate tranche was pulled in to 160bp versus IPTs of 165bp area.

This deal is quick on the heels of a US$1bn Additional Tier 1 issue from UBS that priced earlier on Wednesday at par to yield 7.125%. (Reporting by Will Caiger-Smith; Editing by Natalie Harrison and Marc Carnegie)