Starling Group Holdings Limited has successfully priced its inaugural £150 million Tier 2 bond, marking a significant milestone as the first rated public bond sale from a European neobank. The offering, completed on June 11, 2026, attracted demand from international investors, exceeding supply by more than 2.5 times and demonstrating strong market confidence in the fintech group’s growth trajectory.
The fixed-rate subordinated notes, maturing in 2036 with an early redemption option in 2031, carried an investment-grade Baa3 rating from Moody’s.
They were priced at a coupon of 6.625%, translating to a spread of 223.7 basis points above UK Gilts.
This represents the most favorable terms ever achieved for a Tier 2 issuance of under £200 million, highlighting the company’s solid credit profile and investor enthusiasm.
NatWest and Morgan Stanley served as joint lead managers for the transaction. Interest surged from prominent institutional investors across the UK, Europe, and beyond, with total demand surpassing £400 million at its peak.
The strong oversubscription underscores the growing appeal of innovative banking players in traditional debt markets.
Raman Bhatia, Group Chief Executive Officer at Starling, expressed satisfaction with the outcome.
He noted that the response to this pioneering offering for the neobanking industry validates the market’s belief in the group’s enduring prospects and strategic direction.
Declan Ferguson, Group Chief Financial Officer, emphasized the strategic importance of the move.
“Issuing these Tier 2 notes allows us to enhance our capital structure efficiency and broaden our regulatory capital sources as the business continues to scale,” he stated.
Proceeds will support general corporate activities, including substantial investments in Engine by Starling—the group’s proprietary global Software-as-a-Service platform.
Additional funds will fuel mergers and acquisitions in the financial services space and potential expansion through securing banking licenses in new regions.
Credit ratings agency Moody’s has granted Baa2 long-term deposit and issuer ratings to Starling Bank Limited, along with a Baa3 issuer rating for the holding company, both carrying stable outlooks.
The Baa3 rating applies specifically to the new Tier 2 notes.
Moody’s highlighted the bank’s robust capital position, ample liquidity, reliable deposit funding, and consistent profitability as key strengths underpinning its assessment.
These achievements build on Starling’s recent financial performance.
In its full-year results released last month, the group reported its fifth straight year of profitability, with pre-tax profits reaching £217.1 million for the period ending March 31, 2026.
Customer deposits grew to £12.7 billion from £12.1 billion the prior year.
Following the bond issuance, Starling anticipates maintaining a capital surplus exceeding £600 million, providing a strong foundation for future expansion.
The company plans to list the subordinated notes on the International Securities Market of the London Stock Exchange upon completion of the issuance process.
Starling operates as a financial technology group dedicated to helping individuals and small businesses manage their finances effectively.
In the UK, its fully licensed bank delivers highly regarded personal, business, and joint accounts to millions of users through an intuitive mobile platform.
On the international front, Engine by Starling licenses its advanced technology to partner banks worldwide on a SaaS basis.
Headquartered in London, the group maintains a global presence with 12 offices, including locations in Southampton, Cardiff, and Manchester. This debut bond not only ‘Starling’s funding mix but also signals broader acceptance of neobanks in capital markets, potentially paving the way for similar moves by peers in the sector.
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