Entering the markets with the issuance of a senior preferred note worth at least 200 million euros today unexpectedly Alfa Bank. The bond will have a term of three years and cannot be called before the expiration of two years, i.e. type 3NC2.

The issue, bookrunnered by Morgan Stanley, is part of Alpha Bank’s financial plan to bolster the group’s funds above the interim supervisors and, in particular, to cover liabilities on minimum equity requirements and eligible liabilities (interim target on minimum required eligible liabilities), known as MREL. The final amount of funds raised, which may exceed 200 million euros, will be determined in accordance with their interest rate.

It was preceded in December 2021 by a €400 million Senior Preferred Note issue with a private placement to selected investors, two-year non-callable bonds during the first year and an issue rate of 3%. In total, Alpha has raised €2.7 billion from 2019 to date. It should be noted that Alfa-Bank also carried out a similar issue of bonds (senior preferred) in the amount of 500 million euros in September 2021, and the issue interest rate was set at 2.5%, while it made two other issues . subordinated bonds (level II) of EUR 500 million each – in February 2020 and March 2021 – with an interest rate of 4.25% and 5.5%, respectively.

The title will be for three years in the senior preferred category.

According to a recent report from Axia Research, the bank will achieve a 26.9% MREL as a percentage of its weighted assets by 2025, above its ultimate goal. Specifically, it is expected to issue €400 million worth of MREL securities in the second half of 2022, €750 million in 2023, €500 million in 2024 and €600 million in 2025 and continue additional T2 releases after calling older versions.

Alfa Bank’s new bonds are the Greek bank’s second issue in 2022, as all banks have “frozen” plans to exit the markets due to difficult conditions created by rising spreads on both Greek treasury bonds and bank securities following the Russian invasion to Ukraine. A similar issue at the beginning of the year was carried out by the European Bank in the amount of 500 million euros with an interest rate of 4.5%.

Recall that the entire banking system of the country has planned a series of issues in the coming years in the amount of approximately 10-12 billion euros in order to cover by the end of 2025 the MREL targets required by the SRB.