On 10th April 2006 Futuris Corporation Limited (named changed to Elders Limited in 2009) issued perpetual, subordinated, convertible, unsecured notes (ASX Code: ELDPA) raising $150 million. Distributions on these securities are discretionary, floating rate, preferred and non-cumulative. The interest rate margin was set at 2.20% p.a. above the 90-Day BBSW until the First Remarketing Date on the 30th of June [...]
The increased interest shown by wholesale investors for Additional Tier 1 (AT1) hybrids can be neatly encapsulated by the ANZ launching the first US dollar hybrid offer to overseas investors since 2009. ANZ has been able to obtain an ATO private ruling that allows the bank to issue the hybrid via an offshore branch (London) without having to attach franking [...]
Given the persistently low interest rate environment, the search for yield is becoming an increasingly difficult task. Central banks’ ‘lower of longer’ stance of interest rates has led to exacerbated returns and the timing of a global economic turnaround is uncertain to say the least. The world is in a state of transition. High-growth emerging markets and cutting edge technology [...]
With the successful closure of the second major bank Tier 1 hybrid book build of 2016, now is a good time revisit why these securities are issued and look at how these securities dominate the overall ASX listed interest rate securities universe. Generally speaking, the banks, insurance and diversified financial sector issue these securities to satisfy regulatory capital requirements (Figure [...]
In Australia, financial institutions continually use debt capital markets as source of funding. But what about other companies? The majority of ASX200 non-financial groups tend to issue overseas in larger markets such as the UK, the Eurozone, Singapore and the US. From our findings, we discovered on average 44% of borrowings for ASX200 companies that have marketable debt in Australia [...]
The remarkable turnaround in performance of major bank hybrids (also known as Tier 1 securities) continued last week post the Westpac Capital Notes 4 book-build. One market participant declaring “this is the heaviest demand for a hybrid I have seen in 3 years here”. Whilst the first hybrid issue of 2016 (issued February) proved to be the catalyst for [...]
On the 17th of May 2016 Westpac Banking Corporation (WBC) announced a new transaction, Westpac Capital Notes 4 (Prospective ASX Code: WBCPG). The purpose of this transaction is to provide Regulatory Capital for the group but more specifically it will be treated as additional Tier 1 capital for regulatory purposes. The indicative size of the offer is $750 million but [...]
With the AFR’s Street Talk yesterday reporting that Westpac Banking Corporation is on the verge of announcing the second new Tier 1 Hybrid issue of 2016, presumably to replace the $762.7 million Westpac Trust Preferred Security (TPS) (ASX Code: WCTPA), this is an opportune time to revisit how this segment of the ASX-listed hybrid universe has fared since the first [...]
In light of the new Peet Bond issue announced last week, we thought it would be an opportunity to discuss what are ‘Simple Corporate Bonds’ (SCB). In 2014 in Australian Parliament passed the Corporations Amendment (Simple Corporate Bonds and Other Measures) Act. This amendment aimed to make it easier for both companies seeking finance and retail investors to access the [...]
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An employee-owned financial services provider focused on the Debt Capital Markets.
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ABN 31 164 148 467 ‧ Important Information
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