Metro Bank in the U.K. jettisoned a $250 million pound bond issue on Monday (Sept. 23), after not enough investors picked up on it, even though it had a high yield, according to a report by Reuters.
The bank, which was started in 2010, recently lost 1.5 billion pounds of stock value after it confessed to a loan book miscalculation.
Since then, the bank has been having trouble getting back confidence from investors. It’s also had trouble in the ever increasingly uncertain Brexit climate in the country.
The bank wanted to raise at least 250 million pounds of debt known as “MREL” for a deadline of Jan. 1, 2020, and it offered a 7.5 percent yield on the four-year bond issue. Last year, the bank was offering a yield of between 2 and 4 percent for MREL debt.
The company had only gotten to about 175 million pounds by 1 p.m. in London, and the financial institutions managing the deal even tried to reduce it to between 200 and 250 million pounds.
“Metro Bank PLC thanks the broad number of investors who have met with the company and shown interest in their potential inaugural MREL issuance,” the bank said. “Given the current market conditions though Metro have elected to not proceed with a transaction at this time.”
One analyst, John Cronin at Goodbody, said the inability to complete the deal is a sign the bank is in serious trouble. He said the institution would be sold by the end of next year.
“This is not a good outcome for Metro Bank,” he said. “While I appreciate market conditions are not at their most receptive, this is not good omen in the context of the bank’s ability to meet its interim MREL requirement.”
The bank downplayed the issue.
“This is about leveraging our flexibility given our strong capital position to ensure we get a transaction away at the right time,” the bank said.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More