UniCredit braves higher costs to place six-year bond

MILAN (Reuters) - UniCredit on Tuesday met strong demand for a 1 billion euro ($1.1 billion) senior bond, when it became the first Italian bank to brave sharply higher funding costs driven by rising interest rates.

UniCredit placed a six-year senior preferred bond at an annual coupon of 4.8%, it said in a statement. A year ago, it had sold a bond with the same maturity at 0.925%.

The bond pays a spread of 190 basis points (bps) over the five-year mid-swap rate. That is significantly lower than an initial indication of 220 bps, but it compares with 85 basis points last year.

Both bonds have a one-time issuer call at year five, giving UniCredit the option to redeem it.

UniCredit said demand totalled 2.85 billion euros from more than 200 investors.

Funds bought 62% of the issue with banks, including private ones, taking another 16% and insurers 12%.

Italy and France each took roughly a quarter of the issue, followed by Britain with 15%.

UniCredit Bank AG acted as sole bookrunner and lead manager. BNP Paribas, Mediobanca, Natwest and Santander acted as joint lead managers.

($1 = 0.9314 euros)

(Reporting by Valentina Za, editing by Barbara Lewis)