Bank of Montreal Announces Pricing of $750 Million Non-Viability Contingent Capital Notes

Bank of Montreal (BMO) has recently announced the pricing of $750 million of non-viability contingent capital (NVCC) Additional Tier 1 (AT1) Limited Recourse Capital Notes, Series 5 (LRCNs). This move demonstrates the bank’s commitment to strengthening its capital position and supporting its general banking activities.

The LRCNs will carry an annual interest rate of 7.300 percent, payable quarterly, until November 26, 2034. After that, the interest rate will reset every five years based on the prevailing 5-year U.S. Treasury Rate plus 3.01 percent. The LRCNs are set to mature on November 26, 2084. The expected closing date for the offering is July 17, 2024.

To facilitate the issuance of the LRCNs, Bank of Montreal will also issue NVCC Non-Cumulative 5-Year Fixed Rate Reset Class B Preferred Shares, Series 54, which will be held by Computershare Trust Company of Canada as trustee for BMO LRCN Trust. In the event of non-payment of interest or principal on the LRCNs, the recourse of each holder will be limited to their proportionate share of the Limited Recourse Trust’s assets, primarily consisting of Preferred Shares Series 54.

Bank of Montreal retains the option to redeem the LRCNs, in whole or in part, with the prior written approval of the Superintendent of Financial Institutions (Canada). Redemption can occur every quarter on the interest payment date, starting from November 26, 2034.

The net proceeds from this offering will be contributed to the bank’s general funds and utilized for various banking purposes, including the redemption of outstanding capital securities and repayment of other liabilities. These funds are expected to qualify as Additional Tier 1 capital for regulatory purposes, further strengthening the bank’s financial position.

The joint book-running managers for the offering are BMO Capital Markets Corp., BofA Securities, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Truist Securities, Inc., and UBS Securities LLC.

For more information about the offering, interested parties can obtain copies of the preliminary prospectus supplement and the accompanying prospectus from the U.S. Securities and Exchange Commission’s website or by contacting the respective book-running managers.

Bank of Montreal, as the eighth largest bank in North America by assets, continues to serve its 13 million customers across Canada, the United States, and select global markets. With a diverse range of personal and commercial banking, wealth management, global markets, and investment banking products and services, BMO is committed to driving positive change in the world and contributing to a thriving economy and inclusive society.

More Posts

Bank First Corporation (NASDAQ: BFC) has announced its financial results for the second quarter of …

Universal Technical Institute, the transportation, skilled trades, and energy education division of Universal Technical Institute, …

EQT Corporation, a leading independent natural gas production company, has declared a quarterly cash dividend …