On the 21st of November 2016 Insurance Australia Group Limited (IAG) announced a new transaction, IAG Capital Notes (Prospective ASX Code: IAGPD). The purpose of this transaction is to provide regulatory capital for the group but more specifically it will be treated as Additional Tier 1 (AT1) capital for regulatory purposes. These securities are structured as perpetual, unsecured, convertible, redeemable & resalable, subordinated notes. Distributions are discretionary, expected to be fully franked, floating rate, non-cumulative and subject to payment conditions. Distributions will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus a margin multiplied by (1 – Current Company Tax Rate). The projected margin range is expected to be 4.70 – 4.90% per annum.
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