(Bloomberg) -- Banco Santander SA is the latest lender to tap what is turning out to be the hottest pocket of the global bond market in recent weeks with an offering of additional tier 1 debt.

The Spanish bank raised $2.5 billion in two bonds, one callable after 5.5 years and one that can be repaid after 10 years, with both yielding 9.625%, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. Earlier price discussions were around 10%.

The issue comes hot on the heels of a $1.75 billion sale by Barclays Plc that drew more than 12.5 times the orders, itself coming after a landmark dual-tranche issue by UBS Group AG — its first AT1 after the Credit Suisse takeover — that attracted more than $36 billion in orders.

Santander, a notoriously strict bank when it comes to replacing old AT1s, skipped the call of a €1 billion ($1.08 billion) bond back in August. A person familiar flagged at the time that it would have been uneconomical to replace the debt with a new issue. The price of that bond and a separate $1.2 billion issue that reaches its first call date in February, closed higher on Thursday following the new offering’s announcement.

A multi-currency index of European banks’ AT1s, also known as contingent convertibles or CoCos, has now risen to its highest level since the days that preceded the downfall of Credit Suisse, which resulted in a historic $17 billion wipeout for junior bondholders. Average yields have fallen to under 9.8% from about 11.25% in late October.

A representative at Santander declined to comment.

--With assistance from Olivia Raimonde.

(Updates with final pricing in second paragraph.)

©2023 Bloomberg L.P.