CBA has raised a total of $1.45 billion with its latest hybrid offering, PERLS VIII. The offer has now closed after initially seeking to raise around $1.25 billion. The PERLS VIII hybrids replace the maturing PERLS III hybrid and will pay investors the 90 day bank bill rate plus a margin of 5.20%. This represents an initial return of 7.50% pa including franking credits.
This issue was not without controversy. Investors will recall CBA’s previous issue (PERLS VII) that was undertaken at the height of the demand for yield. Investors put their hand up in droves and CBA sold $3 billion worth at a record low margin on BBSW + 2.80%. This latest issue is at a historically high trading margin for a major bank, although it was below other hybrids’ margins available in the secondary market when it was announced. This includes the CBA PERLS VII that had been continuously sold off since its issue date and has never traded above the $100 issue price. Analysts said that the new issue was priced too low but the PERLS VIII offer was rushed with orders. Broker ‘firm’ bids had to be capped at $650 million.
All in all it has been a successful issue from CBA.