Bond raisings continue to come thick and fast. Commonwealth Bank had announced the pricing of $750 million worth of floating rate notes with a June 2026 maturity and a June 2021 call date. Prior to the price setting, the new subordinated FRNs had an indicative range of 3m BBSW + 265-285bps. Final pricing came in at the bottom end of the range at 265bps, suggesting strong investor interest.
The new notes are designated as Tier 2 securities for APRA purposes and contain a non-viability trigger clause. This may explain why these FRNs were priced at BBSW + 265bps, whereas Westpac’s recent issue of $1.8 billion worth of June 2021 FRNs were priced at BBSW +117bps. The non-viability trigger could entail these notes being exchanged into ordinary CBA shares worth less than the $100,000 face value or indeed written off.