One of five Andorra’s banks – Andbank – announced issue of so-called CoCos bonds and placement of bond issues for its clients. The purpose of bond issue is obligations purchasing of Inversis financial group as part of further foreign banking expansion. Expected volume of bond issuance is from 30 to 50 mln euros.
«CoCos» are the type of convertible bonds with higher yield than other securities. It might be converted to common shares only in pre-agreed terms. This type of bonds is characterized by having higher yield. However, if a bank’s capital adequacy ratio falls lower than previously fixed level, owners of these securities lose all of their investments even if the bank still operates. CoCos bonds are kind of a warranty for a bank against its failure.
The yield of this emission will be around 5.5% during first 5 years.
Andbanc will control all private bank accounts of Inversis clients after the trade “close”. Inversis assets are valued as 7.5 mlrd euros. Parts of the assets are cash from national and international investment and pension funds. Currently, Andbank has 21.5bil euro under management.
The other bank of Andorra (Banca Privada d’Andorra) was interested in trade with Inversis earlier. Nevertheless, the trade was approved in favor of Andbanc by the Ministry of Finances of Spain and The Andorran National Institute of Finance (INAF) last October.