The covered bond programme of Bradford & Bingley (B&B) is set to be wound up this year after a liability management exercise for two of its issues was launched today (Thursday), with its only other two outstanding issues set to mature in May and June, respectively.

In an exercise similar to ones undertaken by NRAM (formerly Northern Rock Asset Management) last year that resulted in the termination of its nationalised UK peer’s programme, B&B is asking bondholders to tender two covered bonds and at the same time approve a proposal to allow any bonds that are not tendered to be redeemed early. B&B previously redeemed early two Swiss franc covered bonds after achieving bondholder approval in July 2014.

The two issues included in the tender are a Sfr250m (£172m based on today’s exchange rates) 2.75% October 2018 (CH0027073219) covered bond, of which Sfr228.75m is outstanding, and a Eu1.25bn (£949m) 4.875% June 2017 (XS0307322437) issue, of which Eu1.09865bn is outstanding. The purchase spreads, inclusive of 1% and 0.5% early tender premiums, respectively, are flat to the respective government benchmarks.

“The rationale for undertaking the offers and the proposals is to facilitate the accelerated release of mortgages assets held within the company’s Eu15bn covered bond programme to allow future portfolio sales and, potentially, the early wind-up of the programme, avoiding ongoing administration costs and obligations,” said B&B, which is run by the UK government’s UK Asset Resolution body, as is NRAM.

According to an investor report dated 20 January, the programme has £2.292bn (Eu3.02bn) of outstandings, including the two issues included in the tender. The only other outstandings are Eu2bn 4.25% May 2016s (XS0252901607) and Sfr250m 3% June 2016s (CH0025437580) issues, meaning that, should the tender allow B&B to cancel the two issues included in the tender, all its outstandings will have been redeemed by June.

In the liability management exercise, the early tender deadline is 10 February, the expiration deadline 26 February, and investor meetings are scheduled for 1 March. As well as allowing for the early redemption of any bonds remaining after the tender, bondholders participating in the offer will approve the early termination of associated swap arrangements.

The quorum in respect of each issue is two-thirds of outstandings, falling to one-third at an adjourned meeting, with the approval of three-quarters of votes cast necessary for the resolutions to be passed.

BNP Paribas and Citi are the dealer managers.