ANZ Banking Group set to launch $1 billion hybrid; six brokers on board
Australian Financial Review Aug 15 2016 7:18 PM
Sarah Thompson, Anthony Macdonald, Joyce Moullakis
ANZ Banking Group is expected to launch a $1 billion hybrid raising as early as Tuesday morning.
Sources said the bank was readying the deal on Monday night, as revealed by Street Talk, which was expected to target $1 billion with an ability to raise more or less depending on investor demand.
The securities are expected to come to market with a 9½ year mandatory call date and a 7½ year optional call date.
It's expected the offer will replace the bank's existing "ANZ CPS2" securities, with investors encouraged to roll existing holders into the new deal.
Sources said ANZ's dealing desk would lead the raising efforts, alongside Commonwealth Bank of Australia, Westpac Banking Corp, JPMorgan, Morgan Stanley and UBS.
Pricing is expected to be determined by a bookbuild in coming days.
The new issue comes only three months after National Australia Bank and Westpac Banking Corp raised $1.35 billion and $1.45 billion through the sale of new hybrids, respectively.
The banks are capitalising on retail and institutional investors who are chasing yield in the falling interest rate environment, while using hybrids to cover their own funding shortfalls.
Westpac's deal was done at 4.9 per cent above the bank bill swap rate, while NAB followed soon after and locked in 4.95 per cent which was the bottom of its 4.95 per cent to 5.1 per cent initial range.
It also comes as Australian companies across all sectors and their bankers consider hybrids as a means of tapping into that search for yield.
Street Talk flagged the new raising last week, with investors expecting hybrid deals from the major banks and are also keeping an eye on retailer Woolworths.
It will also be interesting to see whether the major banks tap offshore hybrid investor demand, following a bumper $US18 billion of bids for ANZ's US dollar hybrid in June.