RBS prices close to curve with new TLAC deal

(UPDATES throughout)

By Will Caiger-Smith

NEW YORK, March 30 (IFR) - Royal Bank of Scotland (LSE: RBS.L - news) amassed US$3.25bn of orders for its US$1.5bn 10-year senior bond on Wednesday, despite a slim new issue concession that led to a slower than expected bookbuild.

The bank priced the deal at T+300bp, 20bp inside IPTs, implying a new premium that was between flat and 5bp, according to bankers and investors.

The buyside initially grumbled that IPTs were not generous enough, but a mid-morning surge in orders from real-money buyers helped lift the book, said two bankers on the deal.

"It (Other OTC: ITGL - news) was an extremely slow start," one said. "We had higher hopes to shut it down a little sooner, but at the end of the day it was more than twice covered."

Despite the slim concession, the deal performed well immediately after pricing, tightening by 4bp.

By contrast, UBS (LSE: 0QNR.L - news) 's senior deal from Tuesday was trading 1bp-2bp wider on Wednesday afternoon.

The new bond was issued through RBS's holding company, meaning it will count towards the bank's Total Loss Absorbing Capacity requirement.

RBS was last in the US dollar market in August, when it sold a US$3.15bn two-part Additional Tier 1 trade.

But the last time it issued senior holdco debt in dollars was in April 2014, when it sold US$700m of bonds maturing in 2017.

RBS was global coordinator and a lead manager, with Bank of America Merrill Lynch, Credit Suisse (LSE: 0QP5.L - news) and Morgan Stanley (Xetra: 885836 - news) as joint leads.

TENDER OFFERS

In conjunction with the new bond sale, the bank has also launched a tender offer for outstanding bonds denominated in dollars, sterling and euros.

The tender offer is part of the transition of the group to a holding company capital and term-funding model to meet new regulatory requirements, RBS said in a filing.

RBS said it will repurchase any and all of three euro-denominated bonds: 1.5% 2016s, 4.875% 2017s and 1.625% 2019s, which have 1.25bn, 890.25m and 1bn outstanding respectively.

It is tendering for four sterling bonds: 6% 2017s, 7.5% 2024s, 6.875% 2025s and 6.375% 2028s, which have £148.5m, £306.2m, £219.6m and £45.2m outstanding.

It is also tendering for four dollar bonds: 1.875% 2017s, 6.4% 2019s, 5.625% 2020s and 6.125% 2021s, which have US$700m, US$1.5bn, US$429.7m and US$321.2m outstanding.

RBS is the global arranger and lead dealer manager, while Goldman Sachs (NYSE: GS-PB - news) is a dealer manager on the tenders. All tender offers close on April 6. (Reporting by Will Caiger-Smith; Editing by Natalie Harrison and Shankar Ramakrishnan)