(Corrects step up margin in paragraph 6 to 50 percent, not 150
basis points)
(For the latest Australia and New Zealand bond news, double
click on [AU/CRD] and then double click on the ID number)
SYDNEY, March 4 (Reuters) - Australian fund manager AMP
Group (AMP.AX) has launched a rare subordinated debt offer of
up to A$300 million ($192.2 million) equivalent aimed at retail
investors in Australia and New Zealand.
Sub debt in Australia, also known as lower Tier 2, usually
targets institutional investors but since the Reserve Bank of
Australia slashed its cash rate to 3.25 percent, retail buyers
are seen keen to receive higher returns than bank deposits.
It's a busy funding month for AMP Bank which is also
expected to launch this month a mortgage-backed securities
issue with Deutsche Bank and Westpac Institutional Bank.
The mortgage-backed offer, likely to exceed A$500 million
according to a market source, will be partly bought by the
government of Australia to help mortgage lenders weather the
global credit crisis. See [ID:nSYD296375]
AMP's retail sub debt offer consists of subordinated debt,
with a 10-year maturity and callable in five years, AMP said.
The notes, to be rated A- by S&P and A3 by Moody's, will
pay a margin step-up, viewed as a penalty fee for the borrower,
of 50 percent of the initial margin.
This is the highest margin possible on such an offer and
well above levels seen before the global credit crisis. The
increase aims to protect debt holders from getting stuck with
long-term debt by detering banks to roll over their sub debt.
Sub debt issued by Australian banks typically offers a
10-year term but has customarily always been paid back after
five years. This was so the issuer could avoid extra costs such
as an increase in the margin paid to investors and a capital
charge set by APRA.
With the worsening of the world economy, institutional
investors in particular see an increasing risk that banks would
be tempted to let their debt roll over, as recently shown by
South Korean bank Woori Bank last month. See [ID:nHKG353758].
That's because it would still be far cheaper to roll over
the debt than to re-issue fresh sub debt.
AMP's notes, to be issued through AMP Group Finance
Services Ltd, will be offered in the Australian and New Zealand
currencies and pay a margin between 425 and 475 basis points,
AMP said.
The final margin will be determined on March 11, following
an investor bookbuild on March 10.
ABN AMRO and UBS are jointly leading the offer in both
countries. ANZ Securities, CommSec and Macquarie will join the
duo as joint leads on the Australian part, while Forsyth Barr
will be the third joint lead on the New Zealand tranche.
Key offer dates:
Bookbuild: March 10
Margin announcement: March 11
Offer closes: April 2
Trading starts: April 9
Call date: May 2014
Maturity date: April 2019
($1=1.561 Australian Dollar)
(Reporting by Cecile Lefort)
