CBA increases hybrid to $900m

Commonwealth Bank increased the scale of its planned hybrid capital raising to $900 million from $700 million. The bank published the prospectus for the sale of the "PERLS V" hybrid securities on Friday.

They will be structured as a stapled security, with an unsecured, subordinated note issued by CBA's New Zealand branch stapled to a preference shares along the line of the prior "PERLS" hybrid sold by the bank. The securities will count as non-innovative, tier one capital.

In the case of this PERLS V security, distributions will comprise a cash component and distribution of franking credits, assuming CBA is trading well. CBA have set the margin at 340 basis points over the 90 day bank bill rate.

After five years CBA may convert the securities into ordinary shares, repurchase the securities or arrange the resale of the securities, and with this decision at the discretion of the bank and not the security holder.

The institutional bookbuild will take place on September 4. A small public offer closes on October 2.