Commentary & Deal Flow

Mizrahi Tefahot Bank Ltd (MZRHIT), exp issue ratings NR/BBB/BBB- (issuer ratings NR/A/A-), US$600m 144A/Reg S (Cat 2) 10nc5 Fixed Rate Reset Tier 2 Sub Notes due 4/7/31. Citi (B&D)/GS joint books/global coordinators. Co-mgr: BNP. Coupon: Fixed rate payable semi-annually in arrear from (and including) 4/7/21  (but excluding) 4/7/26 (the "Reset Date"). Single reset on the Reset Date to the prevailing 5yr UST rate on the Reset Date + initial margin. Optional Redemption: At par, in whole but not in part, on the Reset Date, at Issuer’s discretion, subject to certain conditions including regulatory approval. Special Event Redemption: At par, in whole but not in part, at the option of the Issuer upon occurrence of a Regulatory Event or a Tax Event, subject to certain conditions including regulatory approval. UOP: gcp. Pricing today. Settle 4/7 (T+10).

IPTs: T+250 area.

LAUNCHED: $600m 10nc5 at T+225.

PRICED: $600m 4/7/31 T+225.

 - Day Count Convention: Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and, in the case of an incomplete month (in case of an early redemption or repayment), the actual number of days elapsed on an actual/365-day count basis. The interest payable upon the First Interest Payment Date will be computed and paid on an actual/365-day count basis.
 - Capital Adequacy Trigger Event: The earlier of: (1) Trigger Event for Principal Loss Absorption if CET1 Ratio < 5%, or, (2) Trigger Event for Non-Viability at the earlier of a notice in writing addressed to the Issuer from the Relevant Regulator (a) that, in its opinion, a write-down of the Notes is necessary to avoid the Issuer reaching the point of non-viability (“PONV”), or (b) a decision to inject capital from the public sector, or equivalent support, without which the Issuer will reach the PONV, as determined by the Relevant Regulator.
 - Contingent Write-Down: If a Trigger Event for Principal Loss Absorption occurs, then the principal amount of the Notes will be written down by an amount sufficient to restore the Issuer’s CET 1 Ratio to 5%. Such a write-down will be pro rata with other Tier 2 securities with similar loss absorption features If a Trigger Event for Non Viability occurs, then the principal amount of the Notes will be written down in full Accrued and unpaid interest up until the day prior to the write-down announcement on any written down note will be paid in cash on the day of the write-down.
- Write-up: Following the occurrence of a write-down of the notes resulting from a Trigger Event for Principal Loss Absorption or a Trigger Event for Non Viability, the Issuer will later be able to make a payment in cash in relation to the written-down principal of the Subordinated Notes in whole or in part if its situation improves significantly in the years following the write-down event, according to the terms of the issue. However, any such write-down will become permanent upon the earlier of (i) the date on which the Notes are redeemed, and (ii) 7 years from the applicable write-down date.
- Waiver of Set-Off: No holder may exercise, claim or plead any right of set-off in respect of any amount owed by the Issuer.
- Clearing and Settlement: Settlement of primary issuance through Euroclear (Clearstream available on exception basis subject to completion of fax forms). Secondary trading can settle through Euroclear and Clearstream (not DTC).
- Listing: Tel Aviv Stock Exchange (TACT- Institutional)