New Suncorp Hybrid

Suncorp Bank announced on a new hybrid debt security aimed at retail investors. The $250m hybrid will be used by the company to fund its capital requirements. The Suncorp Convertible Preference Shares (CPS3) offering is expected to be priced at a margin of 3.4 per cent to 3.6 per cent over 3m BBSW, to be determined under the book build. Coupons are discretionary, non-cumulative, floating rate and intended to be fully franked. The convertible preference shares partially replace the $500m CPS2, a hybrid issued in November 2012, then offered at 4.65 per cent above BBSW. Suncorp Group has a credit rating of A+. The note includes an optional exchange date at June 2020 and mandatory conversion June 2022.  There is only one trigger for mandatory write-off or conversion of the CPS3 into ordinary equity of Suncorp, this being a Non-viability trigger. Non-viability would be determined by APRA, if it saw fit. There is no common equity capital trigger that would be pulled when the common equity capital ratio falls below a pre-set level. The notes will be listed on the ASX. The book build for the CPS3 will take place on 7 April and the offer will open on 8 April. The offer is set to close at the end of the month and deferred settlement trading on the ASX will commence on 9 May.