MELBOURNE, AUSTRALIA 10 Nov 2015. Australian Unity is seeking to issue $200m worth of bonds on the Australian Securities Exchange in what is the very first issue of bonds under the “simple corporate bond” legislation passed late in 2014.
The simple bond rules were designed to make it easier for corporates to issue debt securities that are accessible to retail clients as well as remove some of the onerous director’s prospectus requirements. Prior to this legislation, corporate bonds had been largely the domain of those deemed to be wholesale clients.
The new bonds are unsubordinated and unsecured debt obligations with a maturity of 5 years and with an indicative margin over the 90 day bank bill of between 280bps and 290 bps, or a total yield to maturity of between 5.00% and 5.10%. The actual margin will be determined by a bookbuild. [Update 18 Nov] The bookbuild price has been set at BBSW + 2.80% and the issue size has been increased to a minimum of $229.8m – this is the broker firm and institutional allocation, member entitlements and existing bondholder entitlements will be additional.
Australian Unity has previously issued bonds on the ASX. Back in 2011, they issued $120 million worth of bonds at 90 day BBSW + 355bps. These bonds will mature in April 2016.
Michael Saba, Head of Fixed Interest at Evans and Partners, a joint lead manager, said the issue would appeal to a market looking for a plain vanilla bond from a high quality issuer and at decent yield. The fact that Australian Unity was not a bank would also appeal to those seeking to diversify their fixed income investments. With a minimum investment of $5000, they will appeal to a wide range of investors seeking a secure income stream and stable capital.
Australia Unity group managing director, Rohan Mead, said the issue suited their objectives as a mutual company that did not have the ability to expand using equity. “This facility enables both institutional and retail investors, including the company’s members, to participate in these bonds and to contribute to our activities to support the Australian Unity Group’s growth strategy.” The company said that proceeds of the capital raising would be used to partly finance the purchase of Home Care NSW, for general corporate purposes and to refinance Australian Unity’s existing listed bond which was issued in 2011.