Aussie banks likely to follow CBA with hybrid issues

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SYDNEY, Aug 12 (Reuters) - Commonwealth Bank of Australia
(CBA.AX) (CBA)'s A$700 milion hybrid ($578 million) Tier 1
issue offer, announced on Wednesday, is likely to be followed
by similar issues from Australia's top banks, banking sources
said.

National Australia Bank (NAB.AX), Australia & New Zealand
Banking Group (ANZ.AX), Westpac Banking Corp (WBC.AX) and
Macquarie Bank (MQG.AX) will all be looking at hybrids, a
banker said.

He asked not to be named as he is not allowed to speak to
the media.

Tier 1 hybrid issuance has fallen by 80 percent this year,
Reuters data shows, as Australian banks chose to raise large
amounts of cash through popular share issues, boosting their
capital and lessening the need for hybrid Tier 1.

Banks are required to maintain Tier-1 capital as a buffer
to protect bank deposits and may opt to keep even higher ratios
should they consider acquisitions or if they anticipate a rise
in non-performing loans.

Hybrid Tier 1 issues in Australia typically targets retail
investors with franked dividends, or tax benefits and
attractive returns.

A hybrid offer by CBA currently yields around 8.5 percent
including the tax benefit.

Bankers expect institutional investors' appetite to lessen
in the future as credit ratings agency Moody's is considering
taking a more punitive view on the credit ratings of hybrid
issues.

Hybrid Tier 1 issues are usually rated two notches below
senior bank debt, but Moody's may now rate them three to four
notches below.

Details of the CBA's hybrid Tier 1 issue have not yet been
released. A prospectus is expected to be lodged this month with
the Australian Securities and Investment Commission. The offer
is expected to be lead managed by a large syndicate of banks,
similar to those completed by other banks last year.

(Reporting by Cecile Lefort)