Commentary & Deal Flow

Book Update: Books in excess of £600m
IPTs: UKT+230a

• Issuer: Paragon Banking Group plc
• LEI: 213800S1TDKIB1IUTS72
• Instrument: Fixed Rate Reset Callable Subordinated Tier 2 Green Notes
• Issuer Ratings: Baa2/BBB+ (Moody's/Fitch)
• Expected Ratings of Issue: Baa3/BBB- (Moody's/Fitch)
• Status and Subordination: The Notes constitute direct, unsecured, unguaranteed and subordinated obligations of the Issuer and rank pari passu and without any preference among themselves. Upon a winding up or administration of the Issuer, the claims of Noteholders (a) are subordinated to the claims of Senior Creditors (being (i) unsubordinated creditors of the Issuer, (ii)subordinated creditors of the Issuer (other than those whose claims rank pari passu or junior, to claim of the Noteholders or are in respect of Tier 1 Capital and all classes of share capital of the Issuer or Tier 2 Capital) or (iii) creditors of secondary non-preferential debts, and (b) rank (i) at least pari passu with all other subordinated obligations which constitute Tier 2 Capital; and (ii) in priority to the claims of holders of Tier 1 Capital and all classes of share capital of the Issuer
• Format: Standalone, Reg S, Registered
• Size: £175m (expected)
• Issue / Settlement Date: 21-Jul-26 (T+5)
• Maturity: 30-Sep-36
• First Call Date: 01-Aug-31
• Reset Date: 30-Sep-31
• Benchmark Reference Bond: UKT 0.250% Jul-31
• Interest: The Notes will bear interest on their outstanding principal amount from (and including) the Issue Date to (but excluding) the Reset Date at a rate of [●] per cent. per annum. From (and including) the Reset Date to (but excluding) the Maturity Date (the Reset Period), the Notes will bear interest at a rate which is the aggregate of the margin of [●] per cent. and the relevant Reset Reference Rate
• Interest Payment Dates: 30 March and 30 September in each year, commencing on 30 March 2027 (long first interest period)
• Optional Redemption: Subject to PRA Permission and compliance with the Regulatory Preconditions, the Issuer may redeem the Notes, in whole but not in part, at par, plus accrued and unpaid interest, on any day (from and including) 1st August 2031 to (and including) the Reset Date
• Redemption following a Tax Event or Regulatory Event: Subject to PRA Permission and compliance with the Regulatory Preconditions, the Issuer may redeem the Notes, in whole but not in part, at par, plus accrued and unpaid interest, at any time upon a Regulatory Event or a Tax Event
• Issuer's Clean-up Call Option: Subject to PRA Permission and compliance with the Regulatory Preconditions, if, at any time, the outstanding aggregate principal amount of the Notes is 25 per cent. or less of the aggregate principal amount of the Notes, the Issuer may redeem all (but not some only) of the remaining outstanding Notes on any date at par plus accrued and unpaid interest
• No set-off: Subject to applicable law, no Noteholder may exercise or claim or plead any right of set-off, compensation, counterclaim, retention or netting in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the Notes or the Trust Deed and each Noteholder will, by virtue of their holding of any Note (or any beneficial interest therein), be deemed, to the fullest extent permitted by applicable law, to have waived all such rights of set-off, compensation, counterclaim, retention and netting.
• Bail-in: Agreement and Acknowledgement with Respect to the Exercise of Bail-in Power by the relevant UK Resolution Authority
• Regulatory Event: Whole or partial de-recognition from Tier 2 Capital of the Group due to a change in regulatory classification
• Tax Event: A change in the relevant tax laws or regulations resulting in, amongst other things, (i) loss of tax deductibility or (ii) requirement to pay additional amounts in respect of the Notes
• Substitution / Variation: Subject to PRA Permission and compliance with the Regulatory Preconditions, where required, upon the occurrence of a Tax Event, Regulatory Event, the Issuer may at any time, in its sole discretion and without the consent of Holders, substitute all (but not some only) of the Notes for, or vary the terms of the Notes or the Trust Deed so that the Notes remain or become, Compliant Notes
• Events of Default: In the event of non-payment of principal or interest on the Notes when due, the Trustee may (if so directed by Noteholders) institute proceedings for the winding up of the Issuer. The Notes may only be accelerated in the event of a Winding-Up Event
• Documentation: Standalone, Preliminary Offering Circular dated 13-Jul-26
• Selling Restrictions: Regulation S, not 144A eligible, as described in the Preliminary Offering Circular. Customary selling restrictions in the UK, EEA, Canada, Italy, Japan, Singapore and as more fully set out in the Preliminary Offering Circular
• Clearing Systems: Euroclear and Clearstream, Luxembourg
• Denominations: £100,000 and integral multiples of £1,000 in excess thereof
• Expected Listing: Admission to trading on the International Securities Market (ISM) of the London Stock Exchange and the Sustainable Bond Market of the London Stock Exchange
• Governing Law: English law
• Use of Proceeds: Proceeds of the Notes will be on-lent to Paragon Bank plc by way of the Issuer purchasing an equivalent principal amount of tier 2 securities to be issued by Paragon Bank plc. Paragon Bank plc will use such proceeds for the general corporate purposes of the Group, which may include the refinancing of the Issuer's £150,000,000 4.375 per cent. Fixed Rate Reset Callable Subordinated Tier 2 Notes due 2031. An amount equal to the gross proceeds of the Notes will be down streamed to Paragon Bank. The Issuer also intends that an amount equal to the proceeds will be allocated in accordance with its Green Bond Framework for the financing and/or re-financing of Eligible Loans (as described more fully in the Preliminary Offering Circular)
• Target Market: UK MiFIR product governance is eligible counterparties and professional clients only (all distribution channels). No EEA PRIIPs key information document (KID) or UK CCI product summary has been prepared as the Notes will not be made available to retail investors in the EEA or the UK. No sales to retail clients (as defined in the FCA COBS 3.4) in the UK
• Advertisement: The final Offering Circular, when published, will be available on the website of the Issuer (https://www.paragonbankinggroup.co.uk/investors)
• Day Count Fraction: Act/Act (ICMA)
• Business Day Convention: Following, unadjusted
• Business Days: London
• ISIN / Common Code: XS3392880038 / 339288003
• Joint Lead Managers: Barclays, BofA Securities, Jefferies (B&D), UBS Investment Bank
• Timing: Today’s business