Unicredit SGD Bond Alert : Withholding Tax ?

16/04/2013 by

It is definitely not Singapore because with holding tax here is 10% and they have sort of postponed that (again) to 2018 for non residents.

So I am hearing that the January issued Unicredit SPA sub debt is subject to WITH HOLDING TAX ! of 15-20% on its COUPON i.e. about 1% deducted off the coupon.

Would be helpful if someone can verify that for me. It is not mentioned in Bloomberg or the termsheet of the bond when it was launched.

We can only assume it must be with held at source in Italy ? And it sounds sneaky to me, if it is true.

This is troublesome indeed for the SGD 300 mio floating out there. And we also have that dicey Italian law governed non loss absorption clause.

Seeing market price of 91.50/96.00 now.

Bond Alert : Unicredit SPA SGD Sub Debt (tradehaven.me)

Category : Market, Op-Eds

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9 thoughts on “Unicredit SGD Bond Alert : Withholding Tax ?”

FID on 16/04/2013 at 9:01 PM said:

Reading the prospectus, appears, to me at least, that withholding tax is applicable to Italian residents only. Thoughts?

Taxation: All payments in respect of the Notes will be made without deduction for or
on account of withholding taxes imposed by (a) the Republic of Italy, in the
case of Notes issued by UniCredit and Guaranteed Notes, (b) Ireland, in the
case of Notes issued by UniCredit Ireland and (c) Luxembourg, in the case
of Notes issued by UniCredit International Luxembourg, subject to certain
exceptions as further described in “Terms and Conditions of the Notes –
Taxation” and under “Taxation”.

Interest, premium and capital gains paid under, or arising from, the Notes
and received by Italian resident individuals or Italian non-commercial
entities may be subject – in the cases, manners and terms envisaged by
Legislative Decree No. 239 of 1 April 1996 (Decree 239) and Legislative
Decree No. 461 of 21 November 1997, as subsequently amended and
restated – to substitute taxes generally applicable at a rate of 20 per cent.,
as further described under “Taxation”. Neither UniCredit, UniCredit
Ireland nor UniCredit International Luxembourg will be liable to pay any
additional amounts to the Noteholders in relation to any such taxes.

FID on 16/04/2013 at 9:09 PM said:

By the way, market price is closer to 92.00/94.00 today.

damsie28 on 16/04/2013 at 9:09 PM said:

I believe that WHT applies to corporates, not individuals. You may want to check with your banker about submitting a declaration that you are an individual.

tradehaven on 17/04/2013 at 12:32 PM said:

Got the answer but will not be liable for it.
http://www.clearstream.com/ci/dispatch/en/cic/CIC/Tax/ICSD/Italy/Tax_Guide/General_information/White_List_countries.htm
Probably not taxed afterall, if you are a Singapore resident.

FID on 23/04/2013 at 4:34 PM said:

Update: Current market is 93.00/93.75 (yield to call 7.12% / 6.94%). Some value here given Unicredit Sub cds is 570 bps.

tradehaven on 24/04/2013 at 5:27 PM said:

I wonder what leverage banks will give for this bond.
Should be worth looking at vs names like Tata Steel with its low coupon.
US$ Unicredit 10nc5 T2 is going 6.5% and books > 2bio.

FID on 24/04/2013 at 5:59 PM said:

And Btw overnight, Unicredit Sub cds ripped 30 bps tighter to 540 bps.

CYong on 23/10/2014 at 5:13 PM said:

Spoke to few PB. Technically no WHT. But operationally PB are unable to claim it back for the client.

tradehaven on 23/10/2014 at 5:16 PM said:

There will be PBs who cannot and PBs who can.
It is an internal issue then.

Comments are closed.

TradeHaven