BBVA Issues €1 Billion Perpetual Convertible Bonds at 6.5% Yield
Key Facts
BBVA agreed to issue preference securities that are contingently convertible into new ordinary shares, with an aggregate nominal value of 1,000,000,000 euros, according to a bank notice on November 10, 2026. The bank said that, once fully paid, the securities are expected to count toward the group’s additional Tier 1 capital. The issue aims to strengthen this type of capital buffer and provides part of the funding plan the group prepared for 2027. The bank set annual distributions at 6.500% for the period from November 18, 2026, through May 17, 2034. The distributions remain discretionary and conditional, and BBVA said the issue is not directed at retail investors.
The bond is perpetual and has no final maturity date, but it gives the bank a call window in October 2034. This reflects the security’s nature as a capital instrument convertible into shares, distinct from a conventional bond with a specified repayment date: its return is linked to conditional distributions, while conversion into new shares remains subject to the instrument’s specified terms. Distributions will continue at the set rate through May 17, 2034, after which they will be recalculated by adding a margin of 333.4 basis points to the five-year swap rate. This adjustment means the distribution rate will move from the rate set for the initial period to a formula linked to a reference rate and a fixed margin. The discretionary distribution mechanism remains a key part of the issue terms announced by the bank.
The final distribution rate settled at 6.5%, below initial price guidance of 7.125%, BBVA said. The difference between the two levels shows that the bank completed pricing at a lower cost than the indicative level at which the offering began. The bank’s announcement, in the information provided, did not give a figure for demand or details on the order book, so no numbers are available to support a description of investor interest. The bank links the issue to its goal of strengthening its additional Tier 1 capital buffer, while bringing forward part of its 2027 funding. Barclays, BBVA, Bank of America, Citi, Deutsche Bank and Natixis acted as joint bookrunners.
Data for September 2026 provide context on the group’s capital position: its fully loaded common equity Tier 1 ratio stood at 12.21%, against a target range of 11.5% to 12.0%, according to the third-quarter fixed-income presentation. BBVA also said it received the supervisory review decision on October 26, which set the group’s common equity capital requirement at 9.36%, effective January 1, 2027. These figures provide background to an issue aimed at the additional Tier 1 capital category, which is separate from the common equity capital ratio shown in those data. The bank expected to complete the issue on November 18, 2026, the same date it said it would publish reports by the members of the board and the independent expert or auditor on its website. It added that those reports would be submitted to the next general shareholders’ meeting.
BBVA intends to seek admission of the securities to the global market of Euronext Dublin. The expected closing is scheduled for November 18, 2026, with the reports related to the issue to be published that day and later submitted to the next general shareholders’ meeting, according to the bank’s notice. The planned listing and specified closing date give investors a timetable for executing the transaction and completing its procedures. After the initial distribution period ends in May 2034, the rate will be reset based on a margin of 333.4 basis points above the five-year swap rate. The call window set by the bank for October 2034 remains a later milestone under the terms of the perpetual bond.