NAB has launched an issue of capital notes with indicative pricing between 315 and 335 basis points over the bank bill rate – 40 bps above the margin for Commonwealth Bank’s hybrid issue in March.
NAB is seeking A$1 billion or more of additional tier 1 capital. NAB Capital Notes 6 have a first call date of December 2029 and a mandatory conversion date of September 2032.
The notes are convertible and subordinated, paying floating rate, non-cumulative distributions. Distributions will be paid at the same franking rate as dividends on ordinary shares, reducing the cash amount received on each distribution by an amount equal to the level of franking.
In March, CBA raised $1.75 billion through the issue of CommBank PERLS XIV Capital Notes, with a margin of 275 bps and have a first call date of June 2029.
In February, ANZ raised $1.3 billion through the issue of Capital Notes 7, with a margin of 270 bps and a first call date of March 2029.
The widening margin comes on top of a steep increase in the 90-day bank bill rate, which was below 10 bps at the start of the year and is now around 1.2 per cent.
Like ANZ and CBA, NAB has changed the distribution arrangements for the issue to meet the requirements of the new Design and Distribution Obligation.
NAB has not included a specific offer for NAB security holders and will not allow holders of NAB Capital Notes 2, which are being redeemed, to apply directly to participate in the reinvestment offer.
All applications must be submitted through a syndicate broker. Retail investors must receive personal advice before investing.