Monday 23 September 2019 8:22 pm

Metro Bank pulls bond offering on lack of demand

Metro Bank today suffered a further blow after it pulled a £250m bond offering after a lack of demand from investors.

The challenger bank has undergone a tough time since it disclosed an accounting error in January that wiped £1.5bn from its market capitalisation.

Metro launched a bond offering this morning, aiming to raise £250m to of bail-in debt to meet an interim regulatory deadline of 1 January.

Read more: Woodford Trust and Metro Bank kicked from FTSE 250 list

Despite the bank offering a 7.5 per cent yield on the four-year bond issue, up from 2-4 per cent in November last year, orderd only reached £175m by 1pm and the offering was rescinded.

A spokesperson for the bank said: “Over the past few days we’ve been talking to a broad number of investors. Given current market conditions we have decided not to continue with the transaction at this time. 

“Metro Bank has a strong capital position and therefore the flexibility to raise new capital at the right time between now and the end of the calendar year.”

Read more: Metro Bank in talks to sell £500m of loans back to US hedge fund

The bank’s share price has fallen nearly 90 per cent since January when it admitted that a swathe of commercial loans had been wrongly classified and should have been among its “risk-weighted assets”.

The bank issued an emergency cash call in response to the error, which has sparked two regulatory probes, in order to boost the capital it held to cover the loans.

The bank’s share fell five per cent today to 272p.

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