On the 20th of February 2017, the Commonwealth Bank of Australia (CBA) announced a new issue namely PERLS IX (Prospective ASX Code: CBAPF). The notes are expected to be issued on the 31st of March 2017. 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. The indicative size of the offer is [$750 million] but CBA retain the ability to change the issue size. The notes will be offered to eligible holders of Colonial Subordinated Notes (ASX: CNGHA) (priority securityholder offer) and through the broker firm offer. These securities are structured as perpetual, unsecured, convertible, transferable, redeemable and subordinated notes. Distributions are discretionary, fully franked, floating rate, non-cumulative and subject to payment conditions. Interest payments will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus an interest margin in the range of [3.90 – 4.10%] set through bookbuild, multiplied by (1 – Current Company Tax Rate). If a distribution is not paid, the issuer is prevented from paying any distributions to ordinary shareholders until a full distribution is paid on a subsequent payment date.
Summary details of the transaction are listed in the table below:
|Product Types||Capital Note||Last Price||$100.00|
|Par Value||$100||Capital Price||$100.00|
|Fixed / Floating||Floating||Running Yield**||[5.680 – 5.880%]|
|Payment Frequency||Quarterly||Yield to Maturity***||[6.515 – 6.715%]|
|Current Distribution**||[5.680 – 5.880%]||Trading Margin*||–|
|Issue Margin****||[3.900 – 4.100%]||Optional Call Date||[31 March 2022 (5Y)]|
|Franking Credits Inclusive||Yes||Legal Final Maturity||Perpetual|
|ASX Listed||Yes (Prospective ASX Code: CBAPF)||Next Ex-Date||[29 May 2017]|
|Convertible||Yes||Next Payment Date||[15 June 2017]|
|GICS Sector||Banks||Next Cash Distribution****||$0.83|
*Issue size is subject to change but expected to be $750 million. **Based on prospective issue margin below plus 90-Day BBSW of ~1.780%. ***Based on prospective issue margin in the range of [3.900 – 4.100%] & interpolated swap rate to the call of 2.615%. ****Actual cash amount based on $100 face value.