Deutsche Bank AG
) issued $1.5 billion of subordinated notes that qualify under
Tier 2 capital. The notes have a maturity date of May 24, 2028.
The issuance of notes is part of the German lender's newly made
announcement to raise roughly $2.56 billion through a number of
BANK MONTREAL (BMO): Free Stock Analysis
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The notes carry a yield of 4.296%, equivalent to a 2.375%
interest rate above the 10-year Treasury rate. Further, there
will be a one-time call on May 24, 2023, when the debt will be
reset to the 5-year mid-swap rate with an additional 2.2475%.
Deutsche bank will be using the proceeds from the issuance for
general corporate purposes, apart from boosting its regulatory
capital level. The notes will likely receive ratings of Baa3 from
Moody's - a unit of
) - BBB+ from Standard and Poor's, and A- from Fitch.
We believe the issuance of notes is an attempt by the bank to
bolster its capital levels and cater to the stringent regulatory
norms. Dented by the eurozone debt crisis, Deutsche Bank
experienced a fall in trading revenues in the past year. Thus, in
its Strategy 2015+, announced in September, the bank posited a
number of initiatives to enhance its competitiveness including
efficiency improvements, cost cuts and reduced complexities.
Further, the company is focused on reducing its risk-weighted
assets. Notably, its de-risking measures have gathered momentum.
The bank achieved €9 billion ($6.8 billion) of risk-weighted
assets equivalent reduction in NCOU in the first quarter of 2013.
Deutsche Bank currently carries a Zacks Rank #2 (Buy). Other
banks worth considering include
Bank of Montreal
The Bank of Nova Scotia
), both of which carry the same rank as Deutsche Bank.