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)
