Published on 3/1/2024 in the Prospect News Canadian Bonds Daily and Prospect News Investment Grade Daily.
New Issue: Bank of Montreal details $1 billion 7.7% limited recourse capital notes due 2084
By Marisa Wong and Cristal Cody
Los Angeles, March 1 – Bank of Montreal priced $1 billion of 7.7% 60-year non-viability contingent capital additional tier 1 limited recourse capital notes, series 4 (expected: Baa3/BBB-) on Thursday and disclosed details of the offering in an FWP filed Friday with the Securities and Exchange Commission.
The notes priced at par to yield 7.7%, or with a spread over Treasuries of 345.2 basis points.
The coupon is fixed at 7.7% for the first five years, then resets every five years to Treasuries plus 345.2 bps.
The notes may be called after five years.
The issuer held investor calls and a roadshow on Wednesday for the offering. Talk was in the 8.125% area, and the final order book was over $3 billion, according to a market source.
BMO Capital Markets Corp., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Barclays, BNP Paribas Securities Corp. and Credit Agricole Securities (USA) Inc. were the joint bookrunners.
Proceeds will be used for general banking purposes.
Bank of Montreal is a Montreal-based banking and financial services provider.
| Issuer: | Bank of Montreal
|
| Amount: | $1 billion
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| Issue: | Non-viability contingent capital additional tier 1 limited recourse capital notes, series 4
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| Maturity: | May 26, 2084
|
| Bookrunners: | BMO Capital Markets Corp., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Barclays, BNP Paribas Securities Corp. and Credit Agricole Securities (USA) Inc.
|
| Co-managers: | Desjardins Securities Inc., Commonwealth Bank of Australia, HSBC Securities (USA) Inc., Intesa Sanpaolo IMI Securities Corp., Lloyds Securities Inc., nabSecurities, LLC, Natixis Securities Americas LLC, Nomura Securities International, Inc., CastleOak Securities, LP and Mischler Financial Group, Inc.
|
| Trustee: | Computershare Trust Co., NA
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| Counsel to issuer: | Osler, Hoskin & Harcourt LLP, Sullivan & Cromwell LLP and Torys LLP
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| Counsel to underwriters: | Shearman & Sterling LLP
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| Coupon: | 7.7% initially; resets on May 26, 2029 and every five years after that to Treasuries plus 345.2 bps
|
| Price: | Par
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| Yield: | 7.7%
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| Spread: | Treasuries plus 345.2 bps
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| Call option: | In whole or in part quarterly starting on May 26, 2029; in whole following regulatory event or tax event
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| Trade date: | Feb. 29
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| Settlement date: | March 8
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| Expected ratings: | Moody’s: Baa3
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| S&P: BBB-
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| Distribution: | SEC registered
|
| Price talk: | 8.125% area
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| Cusip: | 06368LQ58
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