Novagalicia Banco (NCG Banco) has launched a tender offer targeting the buyback of a Eu1.5bn 4.375% cédulas hipotecarias due January 2019, for which a minimum purchase price of 88% and a maximum repurchase amount of Eu400m have been set.

JP Morgan and RBS are joint dealers on the liability management exercise, which was launched on Friday and expires on 25 May. Effective management of NCG Banco’s outstanding liabilities and strengthening of its balance sheet provide the rationale for the tender offer, which is also designed to provide liquidity to bondholders, according to the issuer.

The pricing will be determined by an unmodified Dutch auction procedure with a minimum purchase price of 88%. A cap of Eu400m has been set on the volume of bonds that will be accepted, but the issuer can modify this.