Barclays & JP Morgan tackle subdebt Bank Danamon

PT Bank Danamon Tbk last week appointed Barclays Capital and JP Morgan Securities as the underwriter for US$300 million subordination bonds by this yearend. The fund generated from bonds issuance will be allotted for bonds payment options issued in 2004 earlier.
An executive involved in the transaction said the bonds issuance will be done when the global bonds market betters.the US$300 million subordination bonds issuance scheme has been proposed to the Central Bank of Indonesia despite the lacking of the bonds structure.
Subordination bonds commonly have 10 years tenure with call option on the fifth year of the bonds. Would the call option be failed to execute, there will be additional interest to be paid by the emitter to the bonds issuer.
Subordination bonds have the same rights as the whole existing subordination debt or the would-be issued debts. However, subordination bonds have junior claim than the debt deposit claim and other debts borne by the bank.
Bank Danamon issued US$300 million subordination bonds four years ago with 7.65 percent interest rate with the due date in 2014.