Translation: Original comment published in Finnish on 9/2/2024 at 8:29 am EEST.

On Friday, Mandatum announced that it will issue a EUR 300 MEUR Tier 2 capital loan to finance the repayment of a previous subordinated loan. This is a normal restructuring measure. The new loan is slightly larger than the previous one, so this has a small negative impact on our forecasts.

New subordinated loan to finance repayment of previous loan

The issuance of the new 300 MEUR Tier 2 bond did not come as a surprise as Mandatum announced early last month that it would redeem the previous 250 MEUR Tier 2 bond on the first possible redemption date of October 4, 2024. The facility will thus replace the company's subordinated loan issued in 2019, which will increase the company's interest-bearing debt by approximately 50 MEUR. The new subordinated loan has a term of 15.25 years and matures in December 2039, unless the company prepays the loan. According to the press release, Mandatum has the right to repay the loan at the earliest five years after issuance if certain conditions are met.

Financing costs will rise with restructuring

The new subordinated loan has a fixed interest rate of 4.5% until December 4, 2029, after which the interest rate will be variable. This is in line with our previous assessments. The previous subordinated loan had a fixed interest rate of 1.9%. We will add subordinated debt to our forecasts in the next update.