Royal Bank of Scotland's Notes Financing ABN Bid Soar

Sept. 27 (Bloomberg) -- Royal Bank of Scotland Group Plc notes financing the bid for ABN Amro Holding NV surged on the first day of trading.

The bank's 1.3 billion euros ($1.84 billion) of preference shares rose 4 percent, reducing the yield to 6.37 percent from 7.09 percent, according to UniCredit SpA prices.

Investors returning to the credit markets after the slump in July and August ordered about nine times more than the $7 billion borrowed by the Edinburgh-based bank, a spokesman said. Banks in the U.S. are today selling $10 billion of loans to fund Kohlberg Kravis Roberts & Co.'s acquisition of First Data Corp.

``The mood has definitely turned more positive, ensuring that performance of the issue has been quite spectacular,'' said Nigel Sillis, who helps manage $17 billion as director of fixed income and currency research at Baring Asset Management in London. ``RBS might be kicking themselves that they could've got away the deal a bit cheaper.''

Royal Bank of Scotland is leading a group including Banco Santader SA and Fortis in the biggest ever financial services takeover, vying with Barclays Plc for control of Amsterdam-based ABN Amro. Barclays's President Robert Diamond said Sept. 10 that Royal Bank of Scotland's 71.4 billion-euro bid ``will probably beat'' his offer.

Fixed Dividend

The debt sale included 750 million pounds ($1.52 billion) of preference shares with a fixed dividend of 8.162 percent, according to data compiled by Bloomberg. The lender has the right to buy back securities in October 2012.

The bank also sold C$600 million ($598 million) of 6.666 percent undated variable notes, according to data compiled by Bloomberg. The coupon on the notes will switch to a floating rate if Royal Bank of Scotland doesn't take up its option to buy back the securities in Oct. 2017.

The full of list of securities sold by Royal Bank of Scotland since Sept. 20 is detailed in a table below.




Description Amount Issued Dividend

US$ Preference Share $1.5 billion 7.64%

Fixed/Floating Notes C$600 million 6.66%

Preferred Capital Securities $1.6 billion 6.99%

Preference Shares 750 mln pounds 8.162%

Preference Shares 1.3 bln euros 7.0916%

Preference Shares $1.6 billion 7.25%