Westpac’s latest hybrid security offering has had its margin set after the completion of a book-build process. The margin on Westpac Capital Notes 4 will be 4.90% and, when added to the current 90 day bank bill swap rate (BBSW) of 2.00%, investors will receive 6.90% annually, inclusive of franking credits.
The distribution rate is set on the first business day of each payment period and therefore the total rate holders will receive for the period will depend on the BBSW rate on that first day. The margin is fixed at 4.90% but as BBSW varies from day to day, so too will the distribution rate of each payment period. There has been an exception made for the first payment period where the BBSW rate is taken from the issue date.
The book-build was closed early on what Westpac describes as “strong demand”. Westpac has increased the offer size to a total of approximately $1.45 billion but the final size will be dependent on how many Westpac TPS (ASX code: WCTPA) holders decide to roll over into the new hybrids and the level of applications made by other eligible security holders. Eligible security holders are those who have registered to receive a prospectus and a personalised application form.