Australian Unity has announced its intention to issue $300 million worth of simple corporate bonds in two tranches. The series C (ASX codes: AYUHC) bonds have a 2024 maturity date while the series D bonds (ASX codes: AYUHD) mature in 2026. Australian Unity’s core businesses are wealth management and insurance. The proceeds will be used to fund the redemption of its existing December 2020 corporate bonds (ASX code: AYUHB).
The new Series C and Series D bonds, which are deemed to be unsecured notes under the Corporations Act, will pay around 3.05% and 3.20% respectively, given the prevailing level of interest rates. As interest rates change, specifically the bank bill swap rate, these quarterly payments will also change and the annualised rate will also vary. The scheduled maturity dates are 15 December 2024 (series C) and 15 December 2026 (series D).The bonds may be redeemed earlier than their respective maturity dates in limited circumstances. Should less than 10% of the bonds remain on issue after a buy-back or asset swap, Australian Unity may redeem them at face value. A similar process takes place should certain tax events or a change of control occur.
These new unsubordinated notes will have distributions equivalent to 3-month BBSW plus a margin of 200bps in the case of the Series C notes and 215bps in the case of the Series D notes. Distributions are to be paid quarterly in arrears and they are not cumulative.
The chart below shows the history of issue margins of ASX-listed notes over the last decade or so, including these latest bonds.
