Latitude Group is diversifying its capital structure, with the launch of its first capital note issue. The expected margin is well above the pricing of recent Suncorp and Macquarie deals.

Latitude is aiming to raise A$125 million through an issue of perpetual, subordinated, unsecured notes. The expected margin is between 475 and 500 basis points.

Latitude will pay discretionary floating-rate distributions quarterly. Distributions will be fully franked and cumulative.

The notes have a relatively short first call date of October 2026.

Last month, Macquarie Bank completed a hybrid issue, Macquarie Bank Capital Notes 3, raising $500 million at a margin of 290 bps and with a first call date of September 2028.

And earlier this week, Suncorp completed the bookbuild for its latest hybrid issue, Capital Notes 4, increasing the offer size from $350 million to $375 million. The margin was set at 290 bps and the first call date is June 2028.

Latitude released its half-year results last week, reporting a net profit of $89.5 million on operating income of $420.9 million. The return on equity was 19.1 per cent.

Business volume (a combination of loans and instalment plans) increased by 5.4 per cent over the previous corresponding period to $3.6 billion. Gross loan receivables fell 5.8 per cent to $6.5 billion.

Credit losses (net charge-off rates) fell from 3.8 per cent of receivables in the June half last year to 2.5 per cent in the latest half.