Macquarie Bank Ltd has priced an issue of floating rate A$750 million Tier 2 securities that will pay a coupon of 2.90 per cent over three-month bank bill swap rate. These are 10NC5 notes, which means the transaction structured as a 10 year non call issue, but can be redeemed after five years if such an action is approved by APRA.
MBL is an ADI sitting within Macquarie Group and funds the group's financial services businesses.
The MBL deal was launched and priced yesterday, with the joint lead managers indicating an expected price in the area of 315 basis points over BBSW, so the final result has delivered Macquarie a saving of 25 bps. The bonds were priced at par.
This transaction is expected to be rated BBB (S&P) and Baa3 (Moody’s), which would rank it just within the investment grade spectrum, and four notches below the bank's standalone ratings of A+ from S&P and A2 by Moody’s, respectively.
The lead managers were ANZ, CBA, MBL (B&D), NAB and Westpac.
The Macquarie Bank tier 2 transaction comes in the same week as MGL's shares started trading ex-dividend (18 May) and after the bank opened its revised offer of hybrid securities, to be known as Macquarie Bank Capital Notes 2.
The bank announced on 13 May that these securities would pay 4.70 per cent per annum, after it was forced in March to withdraw its original offer – made in February 2020 – to pay a margin of 2.90 per cent over BBSW. This action was taken "in the light of significantly changed market conditions," the bank said.
The new Macquarie Bank Capital Notes 2 issue will qualify as additional tier 1 capital, with MBL seeking to raise around $500 million from insto and high net worth investors, existing noteholders and MGL shareholders over the next week.
In the intervening months, MBL has moved to buy back an earlier issue of $429 million Macquarie Bank Capital Notes and $400 million Macquarie Investment Securities to clean up its capital structure. Both MGL and MBL remain very well capitalised, with their Tier 1 capital sitting at 12.7 per cent and 13.3 per cent respectively, "on an APRA basis" the bank announced earlier this year.
Macquarie Bank's hyperactive transacting may encourage the Bank of Queensland to move ahead with a replacement for its BOQ Wholesale Capital Notes, originally issued on 26 May 2015, and due for redemption next week.
BOQ has confirmed that APRA's approval of the redemption of these hybrid securities, conditional on the bank issuing a new Additional Tier 1 instrument "at the first available opportunity".
Macquarie Group has also been active in seeking further funding in overseas markets – for instance, last month MGL completed a US$300 million Samurai loan facility, backed by a mix of Japanese banks, including a $US150 million "green tranche".
This USD-denominated facility was the first green loan issued by an Australian financial institution into the Japanese market, and will be used by Macquarie to fund eligible projects: development of wind and solar farms, waste-to-energy plants, green buildings and clean transportation projects.