Barclays PLC (BCS) saw its stock price surge 5.03% on Tuesday in intraday trading, outperforming the broader market. The rally appears to be related to the bank's launch of a new Additional Tier 1 (AT1) bond offering.
According to reports, Barclays marketed a U.S. dollar-denominated AT1 bond on Tuesday, with initial price talk on the issue at 8.125% and a coupon reset date on March 15, 2035. AT1 bonds are a type of risky debt issued by banks to meet capital requirements.
The issuance of new debt instruments, such as AT1 bonds, can often boost a bank's stock price as investors view it as a positive sign of the bank's ability to raise capital and strengthen its balance sheet. Analysts at CreditSights estimated fair value on the coupon rate for the Barclays AT1 bond at 7.5%, suggesting the initial pricing was attractive to investors.
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