Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FINANCIALS
RBIAV (RBI AV) is issuing AT1 today with an IPT at 8.875% yield – we see fair value of 8.5% yield at best.
- First graphic shows how thin the market is for AT1, noting that Commerzbank trades tight to Deutsche even though CMZB is one (S&P) notch lower-rated.
- If we then look to DB and RBI’s senior preferred curves as proxies (second graphic), investors are demanding a 40-50bp premium for holding RBIAV (or RABKAS) credit over DB.
- RBI is currently trying to sell business in both Russia and Belarus (with some signs of this actually going ahead this year) but there is clearly significant execution risk.
- Looking back, therefore to the AT1 curves, this would imply at least 8.3-8.4% yield as fair value. RBIAV 4.5 Perp (not shown on chart) is yielding 16.6% with a call available at Jun-25, so there is some clear pressure here to get capital issued to make that call. As a result, we see fair value as a yield of 8.5% at best.
AT1 plots
Senior preferred curves
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok