Investors snap up Macquarie hybrid issue
Investors have snapped up Macquarie Group's latest hybrid share issue, prompting the bank to bulk up the size of its offer by up to half.
After last week announcing plans to raise up to $400 million by issuing hybrid shares, Macquarie said on Monday it had received $580 million in commitments from brokers and institutional investors.
Macquarie also increased the maximum offer size to $600 million, and closed the bookbuild early, rather than leaving it open until this Tuesday.
Hybrid shares pay a fixed interest rate, which usually reflects returns on bonds, and eventually convert into ordinary shares.
The assets have been a hit with investors because of their more predictable returns, with big companies raising some $7 billion through hybrid shares last year, and Westpac and NAB each selling more than $1 billion in hybrids this year.
The Macquarie notes will pay a distribution twice a year at the bank bill swap rate plus a margin of 4 per cent - the lower end of the range under consideration.
Macquarie will open an offer to shareholders on Wednesday, but the strong demand means there will be no general retail offer.
While investors have embraced hybrids as a solid source of income during a time of market volatility, the corporate regulator has warned people that the products are often complex and riskier than corporate bonds.
Macquarie shares rose 2.45 per cent, or $1.07, to $45.64.