NAB announced it has raised at least $1.95bn for general corporate purposes including refinancing its existing hybrid (ASX:NABPC) which has $1.3bn outstanding.
The margin was finalised at the lower end of the bookbuild range at 295 basis points.
The first optional exchange will be on 17 September 2027 with mandatory exchange two years later. Exchange, in the context of listed hybrids, can mean redeem, resell to a third party or convert into ordinary shares.
The new hybrid (ASX:NABPG) is expected to begin trading on the ASX on 24 March.
The existing capital notes will finish trading on 11 March 2020 and the final distribution and face value will be paid on 23 March 2020.
There is no offer to the general public for the new hybrids. The offer is only open to: eligible holders of NAB securities who registered on or before 12 February 2020 via the ‘securityholder’ offer (including NABPC holders), institutional investors and clients of joint lead managers, co-managers and syndicate brokers to the issue via the ‘broker firm’ offer.
The NABPG will contribute to NAB’s Additional Tier 1 capital requirement and has the following characteristics:
- Non-cumulative distributions can be missed and never have to be made up. In this instance the bank must cease dividends on its shares, this is known as a ‘dividend stopper’ clause
- Capital trigger at 5.125%, if breached then requires an early conversion to shares or can be written down/off at APRA’s discretion
- Non viability trigger at APRA’s discretion and converts to shares or can be written down/off to support the survivability of the bank
- In the event the bank is wound up and APRA had not already forced a write off due to one of the trigger events above, the hybrids would rank below bank bonds and other creditors in line for repayment but above shareholders
Hybrids are complex securities, do not invest unless you understand the terms above and the risks involved.