Item 1.01. Entry into a Material Definitive Agreement.
Fixed-to-Floating Rate Senior Notes Offering
On March 30, 2020, State Street Corporation (“State Street”) completed its previously announced private offering of $750,000,000 aggregate principal amount of 2.825% Fixed-to-Floating Rate Senior Notes due 2023 (the “2023 Notes”), $500,000,000 aggregate principal amount of 2.901% Fixed-to-Floating Rate Senior Notes due 2026 (the “2026 Notes”) and $500,000,000 aggregate principal amount of 3.152% Fixed-to-Floating Rate Senior Notes due 2031 (the “2031 Notes”) and, together with the 2023 Notes and the 2026 Notes, the “Notes”). The Notes were sold under a purchase agreement, dated as of March 26, 2020, entered into by and among State Street and each of Morgan Stanley & Co. LLC, BofA Securities, Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers named therein (collectively, the “Initial Purchasers”), for resale to in the United States to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to non-U.S. persons in offshore transactions in accordance with Regulation S under the Securities Act.
State Street expects to receive net proceeds from the offering of the Notes of approximately $1.74 billion after deducting estimated expenses and the Initial Purchasers’ discounts.
On March 30, 2020, State Street entered into a supplemental indenture with respect to the Notes with U.S. Bank National Association, as trustee (the “Second Supplemental Indenture”). The Notes are unsecured obligations of State Street and will rank equally with all other existing and future senior unsecured indebtedness of State Street. Additionally, the Notes are structurally subordinated to the indebtedness and other liabilities of State Street’s subsidiaries.
2023 Notes. The 2023 Notes will mature on March 30, 2023. Interest on the 2023 Notes during the fixed rate period will be payable semiannually in arrears on March 30 and September 30, commencing on September 30, 2020. From March 30, 2022 and until the maturity date, the 2023 Notes will bear interest at a floating rate based on the secured overnight financing rate (“SOFR”) plus a margin of 2.69% payable quarterly in arrears.
2026 Notes. The 2026 Notes will mature on March 30, 2026. Interest on the 2026 Notes during the fixed rate period will be payable semiannually in arrears on March 30 and September 30, commencing on September 30, 2020. From March 30, 2025 and until the maturity date, the 2026 Notes will bear interest at a floating rate based on SOFR plus a margin of 2.60% payable quarterly in arrears.
2031 Notes. The 2031 Notes will mature on March 30, 2031. Interest on the 2031 Notes during the fixed rate period will be payable semiannually in arrears on March 30 and September 30, commencing on September 30, 2020. From March 30, 2030 and until the maturity date, the 2031 Notes will bear interest at a floating rate based on SOFR plus a margin of 2.65% payable quarterly in arrears.
We will have the option to redeem the Notes in whole, but not in part, on, and only on, March 30, 2022, in the case of the 2023 Notes, March 30, 2025, in the case of the 2026 Notes and March 30, 2030, in the case of the 2031 Notes at a redemption price equal to 100% of the principal amount
of the notes being redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Supplemental Indenture, a copy of which is filed herewith as Exhibit 4.1 and is incorporated herein by reference, and the Form of Fixed-to-Floating Rate Senior Note, which is filed herewith as Exhibit 4.2 and is incorporated herein by reference.
Registration Rights Agreement
On March 30, 2020, State Street and the Initial Purchasers, entered into a registration rights agreement with respect to the Notes (the “Registration Rights Agreement”). State Street agreed under the Registration Rights Agreement to use its reasonable best efforts to (i) file a registration statement with respect to a registered exchange offer to exchange the notes for new notes with terms substantially identical to the Notes, (ii) cause the registration statement to be declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended and (iii) to consummate the exchange offer on or before the 366th day after March 30, 2020, the settlement date of the Notes.
If State Street fails to satisfy its registration obligations with respect to any series of Notes (a “registration default”) under the Registration Rights Agreement, additional interest will accrue on the aggregate principal amount of the applicable series of Notes at a rate of 0.25% for the first 90 day period after the date of such registration default and increased by an additional 0.25% for each subsequent 90 day period thereafter, up to a maximum additional interest rate of 0.50% per annum over the interest rate otherwise then applicable for the respective Notes.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement. A copy of the Registration Rights Agreement is filed herewith as Exhibit 4.3 and is incorporated herein by reference.