Issuance of NLB Tier 2 Notes

January 17, 2024

NLB successfully concluded the bookbuilding process for its Tier 2 10NC5 notes in the amount of EUR 300 million. Transaction was well received with rapidly growing orderbook with over EUR 1.3 billion of final investor interest. Orders came from reputable fund managers, international financial institutions, banks, insurance companies and other investors.

“Strong credit and performance of the NLB Group have once again been reflected in the successfully completed process of notes issuance. Similarly to the issuance of NLB green bonds in June last year, due to the interest of many domestic, regional and international high-quality investors, the notes were more than 4 times oversubscribed by more than 70 accounts. Furthermore, the IPT (“Initial Price Thought”) which was set in 7.5% area and tightened in final pricing by 62.5bps marks to 6.875%. This remarkable achievement reflects the ever-higher recognition of the bank amongst professional stakeholders. NLB is very proud to have put our name firmly on the map of the international investor community and thereby substantially reduced the gap in credit spreads to our peer group,” commented NLB's CFO Archibald Kremser after the orderbook was closed.

The notes are expected to be issued on January 24, 2024, their maturity date will be January 24, 2034, and the issuer will have the option for early redemption on January 24, 2029. The interest on the principal of the notes will accrue at the interest rate of 6.875% per annum.

The notes are intended for strengthening and optimization of NLB’s capital structure, meeting MREL requirement and for future growth opportunities.

“NLB Group showed its ability to pro-actively manage its capital base for the benefit of our shareholders and demonstrated its ability to represent our region to an international investor base. This also helps develop the interest and awareness of the importance of capital markets locally. NLB will continue to maintain its proven discipline in capital allocation for organic growth and eventually allow also the continued pursuit of inorganic opportunities, should they meet our internal hurdle rates in value accretion. The currently pending strategy update in the run-up to our Investor Day on May 9 is a great opportunity to understand the immense growth potential our region provides,” explained NLB’s CEO Blaž Brodnjak.

Additional objective of the notes issuance is refinancing some of the existing Tier 2 notes with approaching call dates. In parallel with the Tier 2 issuance, NLB is conducting liability management exercise (LME) related to two outstanding Tier 2 notes. The LME process is ongoing and is expected to be completed on January 26, 2024.

New Tier 2 notes issue is in line with published funding plan on capital markets in 2024 which is available in the Interim report for first nine months of 2023.

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