Expanding our platform to release supplementary Tier 1 risk-bearing securities
In a significant move announced on June 3, 2024, in Frankfurt am Main, Deutsche Bahn AG, the German national railway company, has unveiled its intention to issue Additional Tier 1 (AT1) capital instruments. These hybrid financial instruments, which combine debt and equity characteristics, are designed to bolster regulatory capital and absorb losses during financial stress.
AT1 instruments are not a new concept, having been widely used by financial institutions to maintain financial stability. However, they can also be employed by non-financial companies under certain local regulations, as is potentially the case for Deutsche Bahn AG.
The planned issuance by Deutsche Bahn AG, scheduled for October 30, 2029, is of benchmark size and aims to support the company's Tier 1 leverage ratio, while also meeting its Pillar 1 and 2 AT1 requirements. The securities, denominated at €200,000 each, will be issued by Deutsche Bahn AG and will act as the sole bookrunner for the placement of these securities.
The issuance of these AT1 instruments could provide Deutsche Bahn AG with an additional source of capital, enhancing its financial flexibility to invest in infrastructure projects or manage debts. By attracting a different set of investors looking for a mix of debt-like and equity-like returns, the company might also broaden its investor base.
Deutsche Bahn faces various operational challenges, including maintaining infrastructure and competing in a changing transportation landscape. Additional capital could help address these challenges, while the company's reported move towards cloud services might be part of a broader strategy to improve efficiency and reduce costs.
For specific details on the planned issuance and its implications for Deutsche Bahn AG, including financial terms, investor interest, and strategic objectives, reviewing official press releases or financial reports from Deutsche Bahn AG would be necessary. It is crucial to note that the securities of Deutsche Bahn AG will not be registered under the Securities Act of 1933 and will be issued under "Regulation S" of the Securities Act. These securities may not be offered, sold, or delivered within the United States unless registered under the Securities Act or an exemption from registration requirements is available.
Investors interested in Deutsche Bahn AG can trade its shares on the New York Stock Exchange under the symbol DB, as well as on XETRA under the symbol DBKGn.DE. The company's stock is authorized for issuance by the Annual General Meeting held in 2022, and the first call date for the securities is set for October 30, 2029.
This move by Deutsche Bahn AG underscores the company's commitment to maintaining financial stability and navigating the evolving transportation landscape. As the company continues to invest in infrastructure and digital transformation, the AT1 capital instrument issuance could play a crucial role in its future growth and success.
These hybrid financial instruments, AT1 capital instruments, are not new and have been widely used by both financial institutions and, under certain local regulations, non-financial companies like Deutsche Bahn AG, to bolster regulatory capital and absorb losses during financial stress. The planned issuance of AT1 instruments by Deutsche Bahn AG, scheduled for October 30, 2029, aims to provide an additional source of capital, enhancing the company's financial flexibility to invest in infrastructure projects or manage debts.
