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Asset management Business

Danske starts investor talks amid $12 billion debt issuance plan

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The lender has mandated BofA Merrill Lynch, Barclays as well as Danske Bank, Goldman Sachs, JPMorgan Chase and UBS Investment Bank to arrange a series of investor meetings and calls.

Monday 07, January 2019

(Bloomberg) --The bank at the centre of Europe’s biggest money laundering scandal will test the market’s interest in its debt this week.

Danske Bank has started talking to investors in the US and Europe about selling them non-preferred senior notes. Danske plans to issue as much as $6.1 billion in the securities in 2019. It’s a major chunk of the bank’s total funding plan of up to roughly $12 billion for the year, Christoffer Mollenbach, head of treasury, said in an interview.

The roadshow will be unlike any other Danske has undertaken for debt holders. Investors are still digesting the full scale of the bank’s $230 billion dirty money scandal. It’s alleged that a Danske branch in Estonia was the main vehicle in Europe through which suspicious funds from the former Soviet Union made their way into the West until as recently as 2015. The US Justice Department is investigating the case, and investors fear that Danske faces significant fines, potentially in the billions of dollars.

Danske knows the scandal means debt financing will now be costlier for the bank. “we will be paying up and we understand that,” Mollenbach said. “The spreads have widened generally and, secondly, our non-preferred senior trades wider than our peers in the secondary markets.”

Danske’s total debt issuance target for 2019 -- between SEK 60 billion and SEK 80 billion -- is the same as last year’s. Mollenbach says the bank will probably land at the high end of that range. It needs the non-preferred senior notes to meet European requirements for debt that can be bailed in.

 

TAGS : Danske Bank, BofA Merrill Lynch, Barclays, JPMorgan Chase, UBS Investment Bank

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