Societe Generale 8.25% Perp AT1 SGD

Shawn Sng  |   07 Jul 2022  |    401 views

Societe Generale have just announced the issuance of AT1 subordinated notes at an final price guidance of 8.25%. These bonds will not be callable for 5.5 years. If the bonds are not called on the 15 December 2027, they will be reset at the prevailing 5 years SORA-OIS plus the initial spread and every 5 years thereafter. These bonds comes with a loss absorption feature where in the event if the bank’s Common Equity Tier 1 (CET1) ratio falls below 5.125%, principal amount of the notes will be reduced pro rata with other loss absorbing instruments by the relevant write down amount. These notes have a semi-annual coupon payment with the first coupon payment at 15 December 2022.

 

Societe Generale is a French multinational investment bank and financial services company headquartered in Paris. It is also one of Europe’s leading financial services groups and a major player in the economy for over 150 years. It provides financial service support in 66 countries. The bank operates primarily in French retail banking (30%), international retail banking and financial services (35%) and global banking and investors solutions (35%). Societe Generale has a credit rating of A1/A/A- (Moody’s/S&P/Fitch) and the expected ratings for these issuance is expected to be rated Ba2/BB/BB+ (Moody’s/S&P/Fitch)

 

In 1Q2022, Societe Generale net banking income increase by 16.6% YoY (from €6.24bn in 1Q2021 to €7.28bn in 1Q2022). This was driven by stronger momentum in all operations. Operating expenses increased by 12.2% from €4.74bn in 1Q2021 to €5.32bn in 1Q2022 and this increase was due to the rise in variable costs linked to the growth in revenues, currency effect and the increase in other expenses. This resulted in a positive Jaws effect (gross income growth exceeded expense growth) where the cost of income ratio decreased by 6.9% from 63.3% in Q12021 to 56.4% in Q12022. As at 1Q2022, Societe Generale CET1 ratio stood at 12.9%, leverage ratio at 4.3% with a level of 30.5% of RWA.

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