Last week, Suncorp announced it would be issuing $250 million worth of Suncorp Capital Notes 2 (ASX code: SUNPG). Suncorp has now announced the margin above BBSW for distribution payments on the new capital notes.
As has been the usual practice for hybrid issues in recent years, the margin on Suncorp’s latest hybrid has been set at the lower bound of the range. The indicative range was 3.65%-3.85% and hence the margin was set at 3.65%. When this margin is added to the current 3 month bank bill swap rate (BBSW) of 1.70%, investors can expect around 5.35% (annualised) for the first quarter and thereafter if BBSW rates do not alter materially. BBSW is typically at a fairly small margin to the RBA’s official cash rate which is currently 1.50%.
As at the close of business 30 October 2017.
$300 million of the $1 billion offer has already been allocated under the broker firm and institutional offers, even though the target amount to be raised was initially set at $250 million. Suncorp stated the final size of the offer will depend on the volume of applications it chose to accept under the re-investment offer. Suncorp warned re-investment applicants it may scale back applications as it sees fit.