RBS gets needed consents to amend six note series; meeting held Dec. 9

By Susanna Moon

Chicago, Dec. 9 – Royal Bank of Scotland plc said holders gave consents for at least 97% of six series of notes issued under its €25 billion global covered bond program.

The meetings were held Tuesday in London, and the measures passed.

The implementation date for the proposed changes is expected to be Dec. 19 with settlement following one business day, according to a company notice.

As previously announced, the company sought approval for three separate extraordinary resolutions to amend the following covered bonds:

• €1.5 billion 3% series 2 covered bonds due Sept. 8, 2015;

• €2 billion 3.875% series 3 covered bonds due Oct. 19, 2020;

• €1 billion 4.125% series 4 covered bonds due Jan. 15, 2018;

• €2 billion 4% series 5 covered bonds due March 15, 2016;

• €750 million 3.375% series 7 covered bonds due Nov. 23, 2016; and

• £1 billion 5.125% series 8 covered bonds due Jan. 13, 2024.

The early consent fee deadline was 11 a.m. ET on Dec. 1.

The final voting deadline was 10 a.m. ET on Dec. 5.

The consent solicitation was announced on Nov. 17.

The solicitation was related to a downgrade of the issuer’s long-term unsecured and unsubordinated debt obligations to Baa1 from A3 by Moody’s Investors Services on March 13, 2014, as a previous company press release noted.

More background

As a result of the downgrade, in order for RBS to remain swap provider for the interest rate swap agreement and the RBS covered bond swap agreement, it had to take remedial action by obtaining (i) a guarantee of its obligations from an appropriately rated entity, (ii) a novation of its obligations to an alternative swap counterparty or (iii) another action that will not adversely affect the ratings of the covered bonds, the release noted.

Moody’s latest counterparty criteria allow counterparties with a long-term unsecured, unguaranteed and unsubordinated debt rating of lower than A3 to support Aaa rated securities if appropriate collateral posting requirements are in place, the company said.

The company said it therefore decided to seek the consent of the covered bondholders to amend the swap agreements to ensure that RBS can continue to act as swap provider and also to implement the revised Moody’s counterparty criteria, including lowering certain Moody's collateral and transfer triggers.

More solicitation details

The issuer also sought a number of other amendments to update the program documentation to reflect current rating agency criteria and methodologies and the most recent market standards and practice in a number of areas.

The modifications consisted of three separate covered bondholder proposals.

After the proposal announced on July 29, the issuer said it has taken into account the feedback received from its bondholders and changed the proposals from the previous ones in a number of ways.

Among the changes was an early consent fee of up to 0.05%.

The dealer manager was Royal Bank of Scotland plc (attn: liability management group, +44 20 7085 8056 / 3781 or email liabilitymanagement@rbs.com). The tabulation agent was Citibank NA, London Branch (attn: exchange team - agency & trust, +44 20 7508 3867, email exchange.gats@citi.com). The principal paying agent was Citibank, NA, London Branch (attn: agency & trust).

The financial services company is based in Edinburgh.

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