Multitude announced that Multitude Bank has successfully completed the bookbuilding for its Additional Tier 1 (AT1) bond issue of 50 MEUR. The transaction was expected, as the company had already announced it was evaluating the issue in late October. The perpetual bonds will carry a floating interest rate of 3-month Euribor plus 9.0%, which was in the ballpark we expected. We will include the new instrument in our estimates after the Q3 earnings on Thursday. The main near-term impact will be on our EPS estimates due to the interest costs of the perpetual bond, although the additional capital should also support further loan book growth.

The bonds will be issued at 100% of their nominal amount, are expected to be rated B- by Fitch Ratings, and are callable after five years. As we noted when the potential issue was first evaluated, the transaction is not driven by an acute capital need, since the bank's capital ratios are already above regulatory requirements. Instead, we believe it's more about optimizing the capital structure and gaining capital for future growth. While the AT1 instrument strengthens regulatory capital without diluting shareholders, it comes with a relatively high coupon, which was anticipated given the nature of the instrument.