ANZ’s latest hybrid issue began trading on the ASX today. ANZ Capital Notes 4 (ASX code: ANZPG) began trading on a deferred delivery basis with the first trade at $100.63. They have a first call date of 20 March 2024 and an issue margin of 4.70% above BBSW. The hybrids closed the day at $100.85, a modest gain from the $100 issue price. Normal trading is expected to begin on 5 October.
ANZ’s new issue was announced in mid-August when government bonds yields were close to record lows. Since then benchmark yields have risen only a few basis points but along the way rises and falls have been substantial. When ANZ’s new issue was announced the median trading margin of hybrids was 395bps (15 August 2016). ANZ’s margin was set at 370bps about a week later and since then trading margins of hybrids have risen with the median trading margin now around 410bps (27 September). Readers will see from the diagram below how comparable major bank hybrids have fared since the announcement of the issue.
*16 August to 26 September
The ANZ issue raised approximately $1.6 billion, of which $900 million was used to repay CP2 holders (ASX code: ANZPA). The first distribution payment date is set for 20 December 2016 and a distribution amount of $1.0383 franked is expected. For the technically-minded, the issue date volume-weighted average ANZ share price, the price used to determine the maximum conversion ratios and the satisfaction of mandatory exchange conditions (in the event of the hybrids being converted to shares) has been announced as $26.80.
The chart below shows how trading margins stood before the beginning of trading today.
