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Thursday 5 December 2019

Deutsche Bank to buy back €4.8bn in bonds, bolster market

Deutsche Bank headquarters. REUTERS/Kai Pfaffenbach
Deutsche Bank headquarters. REUTERS/Kai Pfaffenbach

Ailish O'Hora

Deutsche Bank is to buyback €4.8bn in senior debt, it said in a statement today.

The lender said it would launch a tender for euro denominated unsecured bonds worth €3bn and a tender for dollar denominated bonds worth $2bn.

 "The Bank's strong liquidity position allows it to repurchase these securities without any corresponding change to its 2016 funding plan", Deutsche Bank said in a statement.

Deutsche shares have fallen over 40pc so far this year and the bank has been struggling with diving bond and stock prices.

"The bank is taking advantage of market conditions to repurchase this debt, lowering its debt burden at attractive prices. By repurchasing this debt below its issue price, the bank realises a profit," said chief finance officer Marcus Schenck.

"Deutsche Bank is also using its strong financial profile to provide liquidity to bond investors in challenging market conditions. At the end of 2015, the bank had around €215bn in liquidity reserves and our liquidity coverage ratio, which measures a bank’s ability to meet short-term liquidity needs, was around 120pc."

The move follows a downgrading of its CoCo bonds by ratings agency Standard & Poors.

Analysts have said the bank could struggle to pay the interest due on those bonds in the future, because according to the rules, only income from a limited range of sources can be used to pay the bills.

(Additional reporting Reuters)

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