Santander Bond Rockets as Dividend Snag Spurs Call Expectations
2020-10-07 13:01:48.412 GMT
An old Banco Santander SA bond made a record
jump amid speculation that the loss-making lender will retire
the note to clear the way for a resumption of dividends.
The security added about 14 cents on the euro to hit 90
cents, the highest since February, according to data compiled by
Bloomberg. The legacy bond, issued at a size of 300 million
euros ($353 million) in 2004, is next callable in March.
Santander may have to act because the terms of the note
effectively prevent dividend payments if the bank fails to make
a profit. The lender has said it wants to resume shareholder
payouts following a coronavirus halt, even after making a
historic $13 billion loss in the second quarter.
The bank is “in a bind,” said Nicolas Schmidlin, a money
manager at ProfitlichSchmidlin AG, who holds the bond. “It’s
suddenly become a lot more likely that they will just call the
bond to get rid of the dividend problem.”
A spokesperson for Santander declined to comment