Should you buy Bendigo and Adelaide Bank CPS 3?

Key Points Capped upside All risk on downside Steer clear Soon after announcing its offer of Convertible Preferences Shares 3 (CPS 3), Bendigo and Adelaide Bank raised the size from $200m to $225m. The strong demand isn’t surprising, as the 4% margin over the bank bill rate paid by CPS 3 looks attractive given low interest rates. No doubt demand for CPS 3 increased further after the Reserve Bank subsequently cut the official cash rate to 2%. At current bank bill rates, the 4% margin results in a 4.4% fully franked yield for CPS 3 (assuming a 30% corporate tax...

Soon after announcing its offer of Convertible Preferences Shares 3 (CPS 3), Bendigo and Adelaide Bank raised the size from $200m to $225m. The strong demand isn’t surprising, as the 4% margin over the bank bill rate paid by CPS 3 looks attractive given low interest rates.

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