(Recasts story, adds details on BPE AT1, adds quotes)
By Helene Durand
LONDON, Feb 5 (IFR) - Spanish lenders Banco Bilbao Vizcaya Argentaria and Banco Popular Espanol have injected some much-needed life into the European CoCo market, testing investor appetite for riskier assets amid renewed Greek-inspired volatility.
BBVA's announcement on Thursday of a two-day roadshow for an Additional Tier 1 bond followed BPE stating on Wednesday that it had sold a similar trade to a small number of investors, turning the page on a failed attempt to raise debt in the format last summer.
Since September, AT1 issuance in Europe has been subdued due to the poor secondary market performance of new transactions.
February is forecast to be a busy month for bank capital issuance - bankers estimate at least 30bn-equivalent of supply in 2015 and market participants are keen to see primary activity return.
BBVA's plans come after it unveiled better than-expected fourth-quarter revenues from lending on Wednesday. The transaction will mark its return to the AT1 market after a year's absence.
"In terms of which name investors want to see come to market, BBVA is up there," said a lead. "It's peripheral but it's a country champion, a good name whose previous deals have performed."
"Greece is going to be part and parcel of life in the next weeks and BBVA will be coming against a backdrop of under-supply in the AT1 market," the banker said.
BBVA appointed Citigroup and UBS as global coordinators, and Barclays and BBVA as joint bookrunners for the deal, which should be launched after the roadshow ends on February 9. Expected ratings are Ba2/BB by Moody's/Fitch.
The bonds will convert into equity if BBVA's bank and group Common Equity Tier 1 ratio falls below 5.125%. According to its 2014 results, BBVA's CET1 ratio was 10.4% on a fully-loaded basis at the end of last year.
BPE opted to minimise execution risk with a so-called club deal, having last summer been forced to pull a perpetual high-trigger transaction after worries at Portuguese lender Banco Espirito Santo spooked the bank capital market.
BPE sold the 750m perpetual non-call 2020 high-trigger deal to around 10 investors via Credit Suisse, Deutsche Bank and Banco Popular Espanol.
The bank said it has now met its AT1 needs under CRD4. But at a price: the sub-investment grade bond came with an 8.25% coupon. Last year's failed deal was marketed at 7% to 7.25%.
The fact that BPE opted to have a 7% trigger pushed the price up. Under EU rules, banks are not required to have such a high trigger, but some lenders have opted to include it as a way to future proof their deals in case regulation changes.
Another banker said it was unclear how much other second tier banks could read into this financing as BPE was well known to CoCo investors and had met them prior to its failed trade. (Reporting by Helene Durand; editing by Alex Chambers, Julian Baker)