ADVERTISEMENT

CoCos Holders Get 25% Returns This Year From SocGen, Santander

CoCos Holders Get 25% Returns This Year From SocGen, Santander

(Bloomberg) -- Holders of some risky bank debt have achieved 25% total returns this year, as investors look to escape $17 trillion of negative-yields bonds worldwide.

A Societe Generale SA dollar note and a Banco Santander SA euro issue lead returns among Additional Tier 1 bank bonds, handing investors about 25% this year, according to data compiled by Bloomberg. Notes from ABN Amro Bank NV, Intesa Sanpolo SpA and UniCredit SpA have also returned more than 20%, the data show.

CoCos Holders Get 25% Returns This Year From SocGen, Santander

Marketwide, AT1s -- which can be risky to hold because they act much like equity if a lender runs in to trouble -- have returned about 15% this year, according to a Bloomberg Barclays index, rebounding from the sector’s first annual loss last year and surpassing about 9.5% from euro high-yield notes. This year’s slump in bond yields amid an economic slowdown has sharpened the appeal of the deeply subordinated bank notes’ high coupons.

Investor demand for CoCos may let Cooperatieve Rabobank UA achieve a record-low euro coupon in a sale on Monday. The Dutch bank set guidance as low as 3.25% after getting more than 3.5 billion euros of bids for a note no bigger than 1.25 billion euros.

To contact the reporter on this story: Alice Gledhill in London at agledhill@bloomberg.net

To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, Neil Denslow, Maciej Onoszko

©2019 Bloomberg L.P.