Market calls for Barclays to listen up

By Aimee Donnellan

LONDON, Nov 8 (IFR) - It was the long-disappeared Midland Bank, rather than Barclays (LSE: BARC.L - news) , that used to call itself the "Listening Bank". But it might be time for Barclays to adopt the slogan.

The UK bank is in the market with its first Additional Tier 1 bond - and the stakes could hardly be higher.

Barclays has enlisted a strong cast of lead managers - Citigroup (NYSE: C - news) , Deutsche Bank (LSE: 0H7D.L - news) , Goldman Sachs (NYSE: GS-PB - news) and UBS - to assist it to sell its AT1 deal. And it would do well to listen to their advice and tap into their considerable expertise in capital deals.

Bankers at lead managers on its previous two capital deals say that the borrower did not pay attention to their advice on those transactions. As a result, they say, its first CoCo was too large, while the execution on its second was bungled (the deal was announced just before Easter and had to be postponed until after the holidays).

And while trickier credits like Banco Popular Espanol have found relative success in the AT1 market, Barclays latest foray will not be easy. After all, a high trigger bond with a coupon that can be turned off like a tap is not going to be at the top of every investor's wish list.

Much is riding on the deal. Not just for Barclays, but for the market as a whole.

Deutsche Bank, for instance, is already lined up behind the British firm as it needs to issue USD5bn of capital notes to improve its leverage ratio, while other European and US banks have to raise as much as USD400bn of bank capital in the coming years.

"Barclays is very stressed out about this deal," said a DCM banker. "Deutsche is right behind them and has to raise billions in capital."

So this time around, Barclays need to take the hint and listen to any advice it can get.