ABN Amro has launched a consent solicitation to convert its outstanding covered bonds from hard to soft bullets, following the example of Credit Suisse, which completed a similar exercise at the end of 2014.

The Dutch bank is aiming to convert 10 covered bonds maturing from December this year to January 2024 from hard to soft bullets, saying in the consent solicitation document that the move will align their terms and conditions with “those commonly seen in the covered bond market to ensure ongoing cost efficiency of this funding programme”. ABN Amro can issue hard and soft bullets under its programme.

Many covered bond issuers have long sold soft bullet covered bonds and these are standard in several jurisdictions, while established issuers last year made moves from hard to soft bullets, Crédit Agricole, for example, making the switch and ING establishing a soft bullet programme alongside an existing hard bullet programme.

Credit Suisse in December became the first issuer to convert outstanding hard bullets into soft bullets after gaining consent from investors to do so.

“It makes a lot more sense for an issuer to have one structure and to optimise its collateral,” said a market participant. “There is no pricing differential in the market and in most cases the investor base is comfortable with it.”

The Swiss bank achieved its conversions after a second noteholder meeting, the first having been not quorate for most of the issues it wanted to switch.

ABN Amro’s exchange will work along similar lines, although the quorum and necessary approval percentages are different: the Dutch bank will require a quorum of two-thirds of holders at the first meeting and one-third at any second meeting, whereas for Credit Suisse the respective levels were 75% and 25%, and the approval rate must be two-thirds at either meeting, whereas for the Swiss bank it was 75%. The fee structure is the same, namely a consent fee of 5bp.

The early instruction deadline is on 6 March, with a meeting scheduled for 19 March. ABN Amro, Credit Suisse and Deutsche Bank are solicitation agents.