AUSTRIA – International pension funds were among the buyers in a €500m hybrid bond sale by RZB, an Austrian co-operative bank that has aggressively expanded its business in central- and eastern Europe (CEE).

According to RZB, international pension funds made up 10% of the bond’s buyers. The major buyers were investment funds, accounting for 40% of the group. They were followed by banks (20%) and insurers (15%).

Earlier today, RZB said it issued €500m worth of hybrid bonds, adding that the issue was “oversubscribed only a few hours after the order book was opened”.

RZB’s hybrid bonds pay annual interest of 5.2% during their stated 10-year maturity. If after ten years, RZB does not call the bonds, which carry a triple ‘A’ rating, they convert to a floater with a coupon of three-month Euribor plus 195 basis points.

Said Patrick Butler, board executive in charge of treasury at RZB: “We have spent time and effort explaining RZB’s structure and strategy to institutional investors and to building a credit curve in senior issues. Actions speak louder than words, and a substantial oversubscription on a €500m deal speaks very loud indeed.”

The RZB spokesman said proceeds from the bond sale would be used for the bank’s continuing operations, particularly where further expansion in CEE was concerned.

RZB says that it is active in 16 markets, serving ten million customers. At the end of 2005, the bank’s balance-sheet assets totalled €94bn and pre-tax profit was €930m in 2005.

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