Crédit Mutuel AM: Monthly commentary on subordinated debt

Crédit Mutuel AM: Monthly commentary on subordinated debt

13 oktober 2025

Obligaties

By Paul Gurzal, Co-Head of Fixed Income, and Jérémie Boudinet, Head of Financial and Subordinated Debt, Crédit Mutuel Asset Management

September was a positive month for the subordinated debt markets, with marked euphoria in the primary market during the first half of the month.

Markets slowed towards the end of the month, driven by US equities, with credit spreads widening slightly. However, all subordinated debt segments ended the month positively, with $AT1 and €AT1 outperforming other segments (+1.20% and +1% respectively).

Primary market activity picked up again in the subordinated debt market. The AT1 market had a very active month on the primary market, with no fewer than 10 issues. Many banks refinanced issues well ahead of their repayment date, such as Abanca, CaixaBank, and Société Générale.

We also had new issuers enter the segment, such as RCI Banque (Renault's captive) and Vanquis. On the insurer side, Sampo and Generali entered the Restricted Tier 1 debt market. On the corporate side, Vodafone, Unibail, Danone, and EDF issued new hybrid bonds to refinance bonds with close call dates.

It should be noted, however, that in all recent transactions, the final price often differs significantly from the initial announced price, as fair value levels are not fully respected. Issuers are managing to tighten their prices considerably thanks to continued strong investor demand.

Mergers and acquisitions remain a key topic. In Spain, BBVA agreed to improve its offer to purchase Banco Sabadell, representing approximately 10% of the previously proposed terms. Furthermore, the Board of Directors waived the possibility of further improving the terms and extending the acceptance period, which runs until October 10. BBVA expects a limited impact on capital, of approximately -21 bps upon closing of the transaction.

In Italy, Banca Monte dei Paschi di Siena completed the acquisition of Mediobanca, obtaining a 62.3% stake in Mediobanca. S&P has placed Mediobanca's long-term rating on "negative watch," as Fitch previously did, as its integration into a banking group with a comparatively weaker structure and a higher risk profile could erode its creditworthiness.

More surprisingly, in the Benelux region, Bloomberg reported that KBC is in early discussions regarding a possible bid for ABN AMRO. The two groups are relatively similar in size, with total assets of approximately €400 billion and ABN's market capitalization of €22 billion, compared to KBC's €41 billion. However, KBC has denied this rumor of a potential takeover.

In our view, such a merger seems unlikely. KBC's CEO has expressed interest in acquiring Ethias, should it be privatized. KBC focuses more on markets similar in size to Belgium and favors the bancassurance model, making a purely banking acquisition less attractive. Moreover, political considerations and the approval of major shareholders would play a crucial role in any potential transaction involving ABN AMRO.

Gerelateerde berichten