Barclays PLC 7.3% AT1 Perpetual SGD

Shawn Sng  |   01 Mar 2023  |    527 views

Tags: B23M

Barclays PLC recently announced the issuance of its additional tier 1 perpetual notes at a final price guidance of 7.3%. The bonds will be callable on 15 June 2028 and every 5th anniversary date thereafter. In the event the notes are not recalled by 15 September 2028, the bonds will then be reset at the prevailing Mid-Market Swap Rate (5-year SORA-OIS) plus the initial margin of 3.929%. Coupon payments for these bonds are paid out quarterly and are scheduled on every (15 March), (15 June), (15 September) and (15 December) each year, with the first coupon payment commencing on 15 June 2023.

As these bonds constitute as additional tier 1 capital for the bank, do note that these bonds come with a capital adequacy trigger. If Barclays’ CET 1 ratio falls below 7%, an automatic conversion of the securities will occur on the conversion date at a price of SGD 2.66.The expected rating for this issuance is Ba2/BBB- (Moody’s/Fitch).

 

Company Overview

Barclays is one of the major banks in the UK with total asset amounting to approx. £1.51 trillion as recorded in FY2022. Barclays mainly operates in two divisions namely Barclays UK (provides consumer banking services), Barclays International (provides corporate and investment banking services coupled with consumer cards and payment businesses) and they are supported by their service company Barclays Execution Services. The bank is headquartered in London, England and is primarily listed on the London Stock Exchange (ticker: BARC). It also has a secondary listing on the New York Stock Exchange (ticker: BCS) and is a constituent of the FSTE 100 Index. The Bank has a credit rating of BBB/A/Baa2 (S&P/Fitch/Moody’s).

 

FY2022 Financials

In FY2022, Barclays reported an improvement in its total income by 13.7% YoY from £21.9bn in the prior year to £24.9bn in FY2022. This was supported by income momentum across its operating divisions. Within its Barclays International division, its Corporate and Investment Bank (CIB) income increased by 8% YoY as improved margins, growth in deposits and fees have uplifted the performance in Transaction banking by approx. +52% YoY. Increase income from both its Global Markets and Fixed Income, Commodity and Currency (FICC) market have also played a positive role in the contribution of income. However, the group’s total operating expenses increased by 14.1% YoY from £14.6bn previously to £17.7bn in FY2022. This increase was mainly due to higher litigation and conduct charges. Net Interest Income (NII) has improved by 27.7% YoY while Net Interest Margin (NIM) has also improved by 61bps from the previous year. This was primarily driven by rising interest environment in the UK. Last not least, in FY2022 Barclays also reported its leverage ratio to be at 5.3%, Liquidity Coverage Ratio at 165% and CET 1 ratio to be 13.9% which is a decrease of 1.2% YoY. This was due to the increase in Risk Weighted Assets (RWA) and a decrease in CET 1 capital. However, despite a reduction in CET 1 ratio, it is still within the bank’s target of 13-14%.

 

As the initial offering has closed for subscription, investors who are interested in these notes will have to head onto the bond’s secondary market in our POEMS platform to get hold of them. These notes can be transacted in a minimum lot size of SGD$250K.

 

Bond Overview

Related Articles

Disclaimers


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com

?>