"I guess it's one way to get a 'dividend' payment of sorts from one of its subsidiaries," said one market participant.
The move, however, has muddied Santander Spain's persistent marketing pitch in recent years that its subsidiaries, like Santander Brasil, Chile and Mexico, Santander USA and now Santander UK, are all autonomous entities who raise funds for their own needs, and not for the needs of the parent.
"I always had my suspicions about their standard mantra of management that its geographical regions are independent from a funding and capital perspective," said one investor. "I think the transaction today confirms the reality that this is a big group and they work to maximise the overall profitability and capital management of the group."
Although it didn't appear that Santander Spain had any other motive than to put some liquidity to work in a high yielding deal, its presence nonetheless demonstrated a link between the parent and one of its autonomous entities when capital securities are being issued.
Any suspicions regarding the autonomy of Santander UK, however, were drowned out by the sheer demand for the deal.
At 250bp, Santander UK priced 37bp inside the trading levels of BPCE (Baa3/BBB+/A-) 5.7% 2023s at 287/280bp. RBS (Ba2/BB+/BBB-) 6.1% 2023 subordinated Yankee is trading at 320bp/310bp today.
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