NAB’s latest hybrid security offering has had its margin set at the lower end of the indicative range after the early close of a book-build process. The margin on NAB Capital Notes 2 has been set at 4.95% and, when added to the current 90 day bank bill swap rate (BBSW) of 2.00%, investors will receive an initial 6.95% pa, inclusive of franking credits. The actual amount of income investors receive over time is subject to changes in the BBSW rate, which tends to follow the official cash rate closely (see below). The first distribution will be paid on 7 October 2016 and the amount will be based on the BBSW rate on the first business day of each payment period. The first payment period begins on 7 July 2016.
The book-build was closed earlier than scheduled on what NAB described as “strong demand”. $1.35 billion of hybrids have been allocated to institutions and stockbrokers’ clients but the final numbers will be dependent on the number of securities allocated under the Securityholder Offer.