Westpac will raise around A$750 million via an issue of capital notes, offering a yield of 340 to 360 basis points over the three-month bank bill swap rate and a call date of March 2027.
The latest issue brings the value of hybrids launched over the past month to $1.75 billion.
If the notes price at 340 bps, Westpac’s margin will be 40 bps tighter than the rates offered by Bank of Queensland and Bendigo and Adelaide Bank, which launched hybrid offers last month.
BOQ’s issue, Capital Notes 2, has a margin of 380 bps and call date of May 2027. The bank is seeking $250 million, with the ability to raise more or less.
Bendigo and Adelaide’s issue, Capital Notes, also has a margin of 380 bps and a call date of June 2027. The bank is seeking $450 million, with the ability to raise more or less.
Also last month, Challenger Financial launched a hybrid issue, seeking $305 million and offering a margin of 460 bps.
Westpac Capital Notes 7 are perpetual, floating rate, non-cumulative convertible securities that will qualify as additional tier 1 capital. Distributions are expected to be fully franked.
The activity of the past few weeks is a strong recovery for the hybrid market, which was knocked around by the onset of the pandemic.
Macquarie Bank launched Capital Notes 2 in February but withdrew the offer soon after, relaunching 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.