Austrian authorities are inviting investment banks to pitch next week to become the dealer-arranger for a planned tender offer for €11 billion ($12.5 billion) of Heta Asset Resolution AG bonds, according to two people familiar with the matter, according to Bloomberg.
One or more banks may also be selected for the transaction next week, said the people, who declined to be identified because they aren’t authorized to comment in public. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. are among the contenders for one of the biggest bond offers in Europe this year, the people said.
Heta is managing the remnants of Hypo Alpe-Adria-Bank International AG, one of the most damaging Austrian bank failures after the 2008 financial crisis. It has contributed to Austria losing two AAA credit ratings and is threatening the province of Carinthia with insolvency as the former Hypo Alpe owner guaranteed bonds exceeding four years of its tax revenue.
Austria’s parliament on Oct. 15 approved legislation under which the federal government can help fund a discounted purchase of Heta’s bonds. Under the law, a special purpose vehicle can make a public offer to buy the bonds if creditors waive their rights under the guarantee. The discount will be imposed on all debt holders if at least two-thirds of the creditors accept the deal, according to the law.
The biggest Heta creditor group, led by Germany’s Commerzbank AG and Pacific Investment Management Co., said the deal was “doomed to failure.”
The Austrian Finance Ministry and the Carinthian government declined to comment. JPMorgan spokeswoman Andrea Amereller, Citi’s Christoph Schlueter and Bank of America Merrill Lynch’s Victoria Garrod also declined to comment.
