MEXICO CITY, June 24 - Mexican lender Banorte announced it has raised $1.35 billion in international capital markets through the placement of hybrid debt. The transaction consisted of perpetual additional tier 1 (AT1) notes sold in two separate tranches.
According to the terms disclosed, the offering was split as follows:
- $600 million of perpetual AT1 notes, callable after 6.5 years, with an 8.0% coupon;
- $750 million of perpetual AT1 notes, callable after 10 years, with an 8.45% coupon.
The bank and market commentary noted that management characterized the transaction as having been executed to take advantage of an "opportunistic window." Financial reporting on the deal also cited the bank's roadshow materials, which indicated that the two-part structure is intended to smooth Banorte's call schedule.
Market reaction on the day of the announcement was muted to negative for the equity: Banorte's shares finished the session down about 1.5% following the disclosure of the issue.
The structure and pricing reflect investor interest in higher-yielding bank paper coming out of Latin America, particularly in instruments classified as AT1. The move places two perpetual instruments on Banorte's balance sheet that are callable at the specified horizons and carry fixed coupons in the 8.0% to 8.45% range.
Details released around the transaction emphasize timing and call scheduling as key elements of the issuance strategy, with management aiming to align the bank's obligations and optionality through the staggered call dates. The combination of tranche sizes and coupon levels comprise the full $1.35 billion raised internationally.
Context and implications
While the immediate share-price response was a decline of about 1.5% on the day the offering was announced, the issuance itself demonstrates demand from investors for yield in bank-issued hybrid instruments denominated in international markets. The two-call-date setup is specifically noted in the bank's presentation as a mechanism to smooth when the notes might be called, rather than concentrating optionality at a single future date.