Crédit Agricole in Innovative GBP 500 Million Liability Management

Cleary Gottlieb represented Crédit Agricole S.A. (Crédit Agricole) in its invitation to holders of its outstanding legacy undated deeply subordinated additional Tier 1 fixed-rate resettable GBP notes to offer to exchange their existing notes for an equivalent principal amount of its new undated deeply subordinated additional Tier 1 fixed-rate resettable GBP notes.

The exchange offer launched on May 20, 2021, and closed on June 18, 2021. Holders of the existing notes who offered to exchange their existing notes prior to June 4, 2021, received an early participation amount of GBP 1 for each GBP 1,000. The first tranche of new notes settled on June 9, 2021, and the second tranche of new notes settled on June 23, 2021. A total principal amount of GBP 396.68 million of the existing notes were exchanged (mostly before the early participation deadline), and the same principal amount of new notes were issued.

The exchange offer was intended to provide eligible holders of the existing notes with the opportunity to receive the new notes with economic terms substantially similar to those of the existing notes, updated to replace the LIBOR-linked mid-swap rate in the existing notes with a SONIA-linked mid-swap rate in the new notes, and updated to qualify as additional Tier 1 capital under current applicable banking regulations. The new notes will qualify as additional Tier 1 capital at the level of Crédit Agricole Group S.A. (the issuer’s consolidated group) and of the Crédit Agricole Group, which also includes 39 regional mutual Crédit Agricole banks.

The new notes have no fixed maturity and will bear interest at a fixed rate of 7.5% per annum from the relevant issue date to June 23, 2026, following which the new notes will bear interest at a floating rate, to be calculated every five years, equal to the sum of the SONIA-linked five-year mid-swap rate, the adjustment spread between six-month GBP LIBOR and SONIA, and the margin.

The existing notes were issued in 2014, and their terms do not fully comply with current regulatory requirements for additional Tier 1 securities. They are grandfathered as additional Tier 1 capital until June 2025, after which they will be disqualified and can be called at the issuer’s option. This is one year before the issuer would otherwise be entitled to call the existing notes. The new notes fully qualify as additional Tier 1 securities under current regulations and therefore cannot be redeemed at the issuer’s option until the first contractual call date in June 2026.

The exchange offer was governed by English law. The existing notes were offered for exchange in the United States to qualified institutional buyers under Rule 144A and outside of the United States under Regulation S of the Securities Act of 1933. The managers for the offering were Crédit Agricole Corporate and Investment Bank and NatWest Markets N.V.

Crédit Agricole is the lead bank of the Crédit Agricole Group, which is the largest banking group in France, and one of the largest in the world.