New NAB Hybrid Falls Short

New NAB Hybrid Falls Short

NAB recently launched a new hybrid and raised $600m, less than a third of the $1.95bn accepted earlier this year.

Pricing was higher at 400 basis points over three-month bank bills compared to 295 basis points back in March.

The lower $600m amount is likely in part to reflect the higher cost of funding and possibly reduced demand in an uncertain environment.

The earlier raising of at least $1.95bn was withdrawn after the bookbuild and while still in the pre-settlement phase. The world changed in that time with COVID-19 spreading, negatively impacting financial markets. Spreads for risks assets blew out and prices for existing securities declined.

Had NAB settled the proposed hybrid issue, investors would have been faced with a loss at first issue.

Positively, NAB withdrew the hybrid.

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Elizabeth Moran
Editorial Director
Elizabeth is a nationally-recognised independent expert on fixed income. She has more than 25 years experience in banking and financial institutions in Australia and the UK and has been published in every major Australian newspaper and investment website. Prior to becoming an independent commentator in 2019 she spent more than 10 years as the head of education and research at fixed income broker FIIG Securities. Prior to joining FIIG, Elizabeth worked as an Editor/Analyst for Rapid Ratings a quantitative credit rating agency. She also spent five years in London, three working as a credit rating analyst for NatWest Markets.