The expert magazine of Ostrum AM

The Banco Santander 1.5 Bn€ 6.5% perpetual Additional Tier 1 Bond (a.k.a Coco 2019 bond) was due to be called or extend on March 19th, 2019.


Credit markets were scrutinizing this call deadline as it was the first of the new generation Coco bonds to be at a high risk of being extended.

Although the extension risk of the bond was already largely priced in, Banco Santander sent an ambiguous message to the market a few days ago by issuing a new (very) expensive USD Coco bond in the market.

Consequently, the market participants’ expectations completely turned to finally believe that Santander would use the proceeds of the new bond in order to call the March 2019 Coco bond.

Therefore, this bond's prices recovered back from 95% to close to Par

Subordinated Debt Market Focus

Santander’s Coco Extension Episode

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