MyState is diversifying its funding profile, with a debut placement of senior-unsecured floating rate notes.
The ticket size, at A$50 million, was pretty small beer, but “MyState Bank plans to be a programmatic issuer,” CFO Gary Dickson said, meaning once or twice a year.
The 4-year FRNs priced at a spread of 65 basis points to 3-month BBSW, the same spread as the better-rated Bendigo and Adelaide Bank achieved on a $225 million 5-year FRN yesterday.
Before now MyState has relied on mortgage-backed securities and subordinated debt to cover funding needs not satisfied by deposits. These were $3.7 billion from households at the end of April and $4.7 billion in deposits overall.
Wholesale funding may increase in the medium term, with the Tasmanian-centric bank embarking on a "significant acceleration" of its growth strategy, relying on its version of digital smarts.
The bank is raising more than $90 million in capital to fund this step-up in its ambitions, with $31.3 million settled two weeks ago (at $4.30 a share) under an institutional placement.
A retail entitlement offer is underway seeking to raise a further $60 million, also at $4.30. This offer (partly underwritten by Merrill Lynch) closes on Monday, June 21.
MyState’s shares have skipped along since the aggressive capital raise was announced, closing yesterday at $5.03.