UPDATE: Santander Plans 4-Year Euro Bond At Swaps +1.60 Area

29th Jul 2010 10:44

(Adds detail, background, comment) By Mark Brown Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Spain's Banco Santander SA plans to issue a euro-denominated, benchmark, senior unsecured bond, maturing August 2014, and has set guidance in the area of 160 basis points over midswaps, as the debt capital markets reopen for top-tier Spanish lenders. The deal follows a EUR1.25 billion, five-year senior bond issue from Banco Bilbao Vizcaya Argentaria SA (BBVA.MC), which priced at 170 basis points over midswaps Wednesday. Santander, the second-largest bank in Europe by market value, Thursday reported an 8% fall in second-quarter net profit, but said it is on course to make a net profit this year. HSBC Holdings PLC, Natixis, and Santander are joint-lead managers of the new deal. Pricing is expected later Thursday. Santander is rated Aa2 by Moody's Investors Service Inc., and AA by Standard & Poor's Corp. and Fitch Ratings. Banks in some peripheral euro-zone countries, especially Spain, have been the focus of market attention over the past few months as the sovereign debt crisis spilled over into the bank debt market. However, confidence has returned over the past week as the sovereign fears have dissipated, and following last week's European bank stress tests, and Spanish bank bond spreads have tightened sharply in recent days. "Despite recent valuation volatility...[the] fundamentals of Banco Santander underscore the credit as a durable favourite in the European banking space," Eleonore Lamberty, credit analyst at ING, said in a note Thursday. "Both [the Santander and BBVA] bonds will provide useful price discovery at the short end of the Spanish banking sector curve." -By Mark Brown, Dow Jones Newswires; + 44 (0)207 842 9485, [email protected] (END) Dow Jones Newswires July 29, 2010 05:44 ET (09:44 GMT)