ANZ Bank New Zealand is seeking to borrow at least $250 million through an issue of capital notes to the public.
ANZ describes the notes as mandatory convertible, non-cumulative, perpetual, subordinated, and unsecured. It's seeking to issue at least $250 million worth of $1 notes, but the bank has the ability to accept unlimited oversubscriptions.
ANZ has given an indicative margin range for the notes of 3.50% to 3.60% per annum over an estimate between the five and six year swap rates. On this basis the coupon is likely to be over 7%.
The notes have received a BBB- credit rating from Standard & Poor’s, which is the firm's lowest investment grade rating. The notes will be treated as tier 1 regulatory capital for ANZ with funds raised treated as part of ANZ's capital management.
"Subject to conditions being met ANZ may repay the notes or convert the notes into shares in ANZ Banking Group Ltd on the May 25, 2020 Optional Exchange Date," the bank says. "ANZ must convert the notes into shares in ANZ Banking Group Ltd on the Mandatory Conversion Date of May 25, 2022."
"The notes may be repaid or converted into ANZ Banking Group Ltd shares at other times as well, or they may remain on issue indefinitely. The notes may also be written off if they are not able to convert into ANZ Banking Group Ltd shares in certain circumstances. The notes will not be guaranteed by any person, and ANZ Banking Group Ltd does not guarantee ANZ," the bank says.
The offer opens on March 6 with a smorgasbord of joint lead managers named, suggesting the notes will be peddled to retail investors. ANZ says the margin and initial interest rate will be revealed on or before the offer's opening date.
You can see more detail of the offer in ANZ's indicative term sheet here, and at www.anz.co.nz/anzcapitalnotes here.
4 Comments
The notes will not be guaranteed by any person, and ANZ Banking Group Ltd does not guarantee ANZ," the bank says.
Therein lies the rub - domestic depositors have the same unsecured exposure and yet are deemed not worthy enough to be in receipt of a 7% return, consistent with what professionals believe is a fair return for equity like bank funding. OBR presupposes depositors' savings will be written off just like any other unsecured creditor. Wake up regulators and enforce a fair deal for those charged with the ultimate responsibility of underwriting domestic banks while protected covered bond creditors and foreign wholesales lenders can walk away intact.
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