MyState has announced it has priced another Tier 2 subordinated note which will be issued shortly. The new notes have terms much along the same lines as the ones it issued in August of last year. As with the 2015 issue, these notes are callable in five years (September 2021) and they have a final maturity date in ten years (September 2026). They also have the standard non-viability clause required to qualify for Basel 3 capital. A triggering of this clause leads to conversion of the notes into ordinary shares, which are listed on the ASX under the code MYS.
This latest transaction is priced at BBSW + 425bps, which seems quite high until it is compared with the pricing of their notes issued just over twelve months ago. That transaction was priced at BBSW + 500bps and this latest offering from MyState indicates how demand for high-yielding assets in a low yield world has dragged spreads down. At current BBSW rates, interest on the new notes will be about 6% per annum.
MyState confirmed it had held negotiations with La Trobe Financial, as well as with “a number of parties” and it is likely the proceeds of this latest bond issue will be used to finance any such acquisition. Senior debt issued by MyState is rated BBB by S&P Global Ratings.