Macquarie pursues $400m hybrid issue
The issue starts the latest round of hybrid share raisings, after a flurry of issues last year by large companies that raised more than $7 billion from investors.
Hybrid shares pay a set interest rate, which usually tracks the price of debt, and after a set period of time convert into ordinary shares.
Given they have bond-like features, paying a predictable yield, this makes them attractive to retail investors in choppy markets.
The home-grown investment bank will issue the Macquarie Capital Notes, which are fully paid, subordinated and unsecured instruments. The notes will be listed on the ASX and convert to ordinary Macquarie shares in June 2021.
The notes will be issued with a face value of $100 each and provide investors with a twice yearly distribution rate calculated as the 180-day bank bill swap rate plus a fixed margin.
The margin is expected to be in the range of 4 per cent to 4.2 per cent to be determined under the book-build.
"The note offer is consistent with Macquarie's strategy to manage its capital mix and maintain a diverse source of funding," chief financial officer Patrick Upfold said.
"Macquarie has a strong balance sheet with well diversified funding sources and minimal reliance on short-term wholesale funding markets," he said.
The notes will be sold to institutional and retail investors and Macquarie has left the door open to raise more under the offer.
Earlier this year Westpac more than doubled the size of its hybrid share offering to $1.25 billion, due to strong demand.
Frequently Asked Questions about this Article…
Macquarie Group plans to raise up to $400 million by issuing hybrid shares called Macquarie Capital Notes. According to the company, the offer is intended to boost its balance sheet and help manage its capital mix by maintaining diverse funding sources.
Macquarie Capital Notes are fully paid, subordinated and unsecured hybrid instruments that will be listed on the ASX. The notes are scheduled to convert into ordinary Macquarie shares in June 2021.
Hybrid shares pay a set distribution that typically tracks the price of debt, making them bond-like with a predictable yield. That predictable, twice-yearly distribution can make hybrids attractive to retail investors, especially in choppy markets.
Each Macquarie Capital Note will be issued with a face value of $100. Distributions will be paid twice yearly, with the rate calculated as the 180-day bank bill swap rate plus a fixed margin.
Macquarie expects the fixed margin on the Capital Notes to be in the range of 4.0% to 4.2%. The final margin will be determined through the book-build process.
The notes will be sold to both institutional and retail investors. Macquarie has indicated it may leave the door open to raise more than the initial $400 million under the offer if demand warrants.
Macquarie’s CFO Patrick Upfold said the offer is consistent with the bank's strategy to manage its capital mix. He said Macquarie has a strong balance sheet with well-diversified funding sources and minimal reliance on short-term wholesale funding markets.
Yes. The Macquarie issue follows a recent round of hybrid raisings — last year large companies raised more than $7 billion from investors — and earlier this year Westpac more than doubled the size of its hybrid share offering to $1.25 billion due to strong demand.
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