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Daily Archives: 13th February 2019

13th February 2019

To Fall or Not to Fall on the Non Call | Bank Capital Insights

Head Scratcher or Mis-priced Hope?

Banco Santander (SANTAN) in the end decided not to call their EUR 6.25 Perp 19 AT1 for economic reasons.  This is the first AT1 not to be called and, to some extent, this has come as a surprise to most investors.  However, purely from an issuer perspective, it makes complete sense.

Post the non-call, with a reset spread of 541 bps, this AT1 now should yield about 5.5% from next month. Initially post the non-call announcement, the AT1 dropped about 2 points and then bounced back and is trading close to par. This strange price action has opened up more questions than answers.

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