Metro Bank bondholders back refinancing plans despite significant haircut
Metro Bank has secured the support of over three quarters of its bondholders for its new refinancing plans announced at the beginning of the week.
The refinancing package, agreed late on Sunday evening, includes a £325m capital raise, led by existing shareholder Spaldy Investments, alongside £600m of debt refinancing in which holders of the bank’s tier 2 will see a 40 to 45 per cent haircut.
Today the bank confirmed that it had received the support of over 75 per cent of its tier 2 and MREL noteholders, giving it the requisite support to go ahead with its plans.
“The required number of holders of both the tier 2 instrument and the MREL senior instrument are committed to support written resolutions to approve the debt refinancing,” the bank said.
MREL, the Minimum Requirement for own funds and Eligible Liabilities, is a kind of capital which aims to absorb losses and potentially supports recapitalisation if an institution is on the point of failing.
The capital raise will shore up the bank’s capital and extend the maturity of its debt profile significantly. Regulators had been concerned by a wall of debt maturing in 2025.