James Packer's Crown Resorts has announced a $600m Subordinated Notes II ('Notes II') hybrid issue, joining the big banks in taking advantage of historically low interest rates to raise cheap capital.
But as with Crown's pokie machines, the terms of Notes II are weighted in the company's favour. Paying a 4% margin above the bank bill rate, Notes II compare favourably to term deposit rates and recent bank hybrid offers. ANZ's (ASX: ANZ) Capital Notes 3 pays 3.6% while NAB's (ASX: NAB) Capital Notes offers 3.5%. The comparative attractiveness explains why Crown's offer was quickly increased from its original target of raising $400m to $600m.