11:34 AM EDT, 08/13/2024 (MT Newswires) -- KeyCorp ( KEY ) is "likely" to use the $2.8 billion strategic minority investment from Bank of Nova Scotia (BNS) to restructure its bond portfolio and improve its position to seize growth opportunities or endure unforeseen economic surprises, RBC Capital Markets said in a Tuesday note.

KeyCorp ( KEY ) announced the investment agreement with Bank of Nova Scotia on Monday, through which the latter will acquire a 14.9% stake in KeyCorp ( KEY ) at a fixed price of $17.17 per share.

According to RBC, KeyCorp ( KEY ) plans to evaluate a potential repositioning of its available-for-sale securities portfolio in conjunction with the capital raising to speed up expected improvements in capital, liquidity, and profitability.

RBC also said the investment reduces the possibility that KeyCorp ( KEY ) would need to reduce its dividend to build up its common equity tier 1 or CET1 levels as the transaction is already estimated to increase its CET1 ratio by 195 basis points to 12.4% as of June 30.

RBC Capital Markets has an outperform rating and $17 price target on KeyCorp ( KEY ).

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