DEUTSCHE Bank hopes to raise €5bn in a series of convertible bond (coco) issues over the coming 18 months, the bank announced yesterday.
The bonds are unusual as they will suspend payments to investors if the bank’s core capital ratio falls below a trigger level of 5.125 per cent. If the bank’s buffer later recovers above that level, payments will re-start.
Such a suspension system contrasts with cocos from other banks, in which investors are either completely wiped out when the capital level falls too low, or find their debt converted into equity.
Deutsche will begin a roadshow next week and will initially work on a €1.5bn tranche, in several currencies.
Each €1.5bn will boost the bank’s leverage ratio by around 10 basis points. The ratio currently stands at 3.1 per cent, uncomfortably close to the incoming regulatory minimum.
Meanwhile the bank’s long-serving global head of FX, Kevin Rodgers, is retiring in June to focus on interests including academia and music.
A source with knowledge of the situation said his exit is unrelated to regulators’ probes into the foreign exchange markets.