Bank of Queensland has launched a hybrid issue, seeking A$200 million, with a margin over three-month BBSW expected to be between 380 and 400 basis points.
BOQ Capital Notes 2 will qualify as additional tier 1 capital. The bank said it has the capacity to raise more than $200 million.
Capital Notes 2 are fully paid, unsecured, non-cumulative, perpetual convertible notes.
The notes have an optional redemption date of May 2027 and a conversion date of May 2029 if mandatory conversion conditions are met.
Trading on the ASX will commence on December 1. Distributions are expected to be fully franked.
The previous bank hybrid issue was Macquarie Bank’s Capital Notes 2, which were launched in February, withdrawn from sale as the pandemic hit and relaunched in May.
Between February and May the margin blew out from 290 bps to 470 bps, reflecting weak trading conditions in the hybrid market at the time.
Earlier this month Challenger Financial launched a hybrid issue, seeking $305 million and offering a margin of 460 bps.
Researcher Bond Adviser issued a report on the issue, saying: “Our analysis suggests [the issue] should be priced at approximately a 30 bps premium to the big four major bank AT1 curve. At a 380 bps margin, the new note is paying a 36 bps premium, so looks fairly priced.”