Investors snap up Macquarie hybrid issue
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.
Frequently Asked Questions about this Article…
Investors snapped up Macquarie Group's latest hybrid issue, delivering $580 million in commitments from brokers and institutional investors. Macquarie increased the maximum offer size from $400 million to $600 million and closed the bookbuild early due to strong demand.
The article explains that hybrid shares typically pay interest and eventually convert into ordinary shares. Specifically, Macquarie's notes will pay a distribution twice a year at the bank bill swap rate (BBSW) plus a margin of 4%—noted as the lower end of the range under consideration.
Investors have been attracted to hybrids because they offer more predictable income compared with some other investments. The article notes big companies raised about $7 billion through hybrids last year, and Westpac and NAB each sold more than $1 billion in hybrids this year.
No. Macquarie will open an offer to shareholders, but strong demand in the institutional bookbuild means there will be no general retail offer, according to the article.
Macquarie's hybrid notes will pay distributions twice a year at the bank bill swap rate plus a 4% margin. The article notes this margin represents the lower end of the range Macquarie was considering.
Yes. Because of strong demand, Macquarie increased the maximum offer size to $600 million (up from $400 million announced earlier) and closed the bookbuild ahead of the originally planned deadline.
The article notes that while hybrids are popular for income, the corporate regulator has warned they are often complex and can be riskier than corporate bonds. Investors should be aware of that complexity and risk when considering hybrids.
Macquarie shares rose 2.45%, or $1.07, to $45.64 following the announcement and strong demand for the hybrid issue.
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