NAB Capital Notes 3
12 Feb 2019
Gamma Advisory
This information is general in nature and is not to be construed as advice.
NAB has launched a subordinated note issue with the new NAB Capital Notes 3 (NABPF). NAB is raising Tier 1 Capital to satisfy their regulatory capital requirements and maintain the diversity of their sources of funding. This investment has the following characteristics:
- NAB Capital Notes 3 are subordinated, unsecured notes.
- NAB is expected to raise $750 million, with the ability to raise more or less.
- NAB Capital Notes 3 are expected to be quoted on the ASX under the code ‘NABPF’.
- The price is $100 per share with the minimum application being 50 notes ($5,000).
- Distributions on NAB Capital Notes 3 are paid quarterly, preferred, non-cumulative floating rate payments and are expected to be fully franked.
- The distribution payments will be based on a floating rate. The rate will be calculated based on the 90-Day BBSW (Currently 2.00%) plus a margin to be determined by a book build. This margin is expected to be in the range of 4.00-4.20% per annum over the 90 day BBSW.
- This would equate to a grossed up annual return of 6.00-6.20% (4.20-4.34% fully franked).
- The first distribution is scheduled to be paid on 17th June 2019.
- The notes rank ahead of Ordinary Shares and equally with other preference shares, but behind all creditors of NAB.
- NAB may, with APRA’s prior written approval, elect to convert all or some NAB Capital Notes 3 on the 17th June, 2026.
- The mandatory exchange date is 19th June 2028.
- Further guidance on investing in bank hybrid securities (https://www.moneysmart.gov.au/investing/complex-investments/hybrid-securities-and-notes/bank-hybrid-securities) can be found on ASIC’s Money Smart website.
The Prospectus and BondAdviser Research Report for this issue can be found by clicking on the below links: