New Issue: Bank of Queensland Capital Notes

On 22 November 2017, Bank of Queensland Limited (“BOQ”) issued an offer for Bank of Queensland Limited Capital Notes (expected ASX Code: BOQPE), to raise $300 million, with the ability to raise more or less, accompanied by a reinvestment offer for holders of the existing Bank of Queensland Convertible Preference Shares (CPS, ASX Code: BOQPD). These securities are structured as perpetual, subordinated, unsecured, and convertible. Distributions are expected to be discretionary, noncumulative, floating rate, fully franked, and paid on a quarterly basis in arrears until converted or redeemed. The securities will be issued on 28 December 2017 and the purpose of this transaction is to partially repay the $300 million CPS (BOQPD) through the reinvestment offer, with the remainder potentially redeemed at the discretion of BOQ, on 15 April 2018, and to be used for general corporate and funding purposes. The margin on this security is expected to be set at [3.75% - 3.95%] p.a above the 90-Day BBSW.

This security has no fixed maturity date but is scheduled for mandatory conversion into BOQ ordinary shares on 15 August 2026, or later, when conversion conditions have been satisfied. At the issuer’s discretion, and subject to approval by APRA, the notes may be redeemed/transferred or converted on 15 August 2024. As this security meets the new capital instrument eligibility criteria under Basel III, it also contains the Loss Absorbing Events terms known in the documentation as either a Common Equity Trigger Event or a Non-Viability Trigger Event. The security therefore qualifies as Additional Tier 1 capital. Upon the occurrence of either of these events this security will be automatically converted into ordinary shares or written off without the protection of conversion conditions. Conversion calculation ratios are set based on issue date VWAP and will be updated once known. If conversion cannot occur for any reason the notes will be written off and all holders’ rights terminated.

Summary details of the transaction are listed in the table below:

Product Types

Capital Note

Last Price


Issue Size*




Par Value


Capital Price


Fixed / Floating


Running Yield**


Payment Frequency


Yield to Maturity***


Current Distribution**


Trading Margin***

[3.750% - 3.950%]

Issue Margin***

[3.750 - 3.950%]

Optional Call Date

15 August 2024

Franking Credits Inclusive


Legal Final Maturity


ASX Listed

Yes (Prospective ASX Code: BOQPE)

Next Ex-Date

24 January 2018



Next Payment Date

15 February 2018

GICS Sector


Next Cash Distribution****


* Issue size may subject to change. ** Based on prospective issue margin range below and assumed to be [3.75%] plus 90-Day BBSW. *** Based on issue margin and an interpolated swap rate to call of 2.5216%. **** Actual cash amount based on $100 face value.




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