...issues a puttable 2 year bond

Lithuania’s AB Bankas Snoras has announced its intention to issue local currency bonds with a maturity of two years. The bonds will be distributed exclusively through the branch network until October 21. The maximum total volume to be placed with the clients is set at LVL 280 mn (EUR 81 mn). The bond has a nominal of LVL 100, is puttable at 8 dates (see the table bellow) and is bearing 7% annual coupon. The bonds should be OTC tradable from the end of the subscription period (October 23) onwards.

 

We believe that the bank is arguably attempting to lower down its effective costs of funds, since under the current distressed market conditions its only Snoras 7% May/10 bond trades at a “screen” asset swap spread of 1300bp. We are confident that the bond should adapt to the current adverse pricing upon reaching the status of a tradable instrument (end of October).

 

We stick to our sell recommendation on the name issued on September 9.