On 23 November 2015 Macquarie Group Limited (MQG) announced a new transaction, Macquarie Capital Notes 2 (Prospective ASX Code: MQGPB). The purpose of the transaction is for capital management purposes of the group but also to purchase additional tier 1 instruments issued by Macquarie Bank. MQG is the non-operating holding company (NOHC) of all companies within the Macquarie Group but is a subordinated creditor to its operating subsidiaries, hence the MQG is arguably a higher risk issuer than Macquarie Bank or other subsidiaries. The size of the offer is indicated at $400 million but will change based on demand.
The capital notes are structured as perpetual, unsecured, convertible, transferable, redeemable and subordinated notes. Distributions will be discretionary, partially franked (variable but currently 40%), floating rate, non-cumulative and subject to payment conditions. They will be paid on a half yearly basis based on 180-Day BBSW plus a margin. This margin will be set at bookbuild and current guidance is [5.15 to 5.35%]. This security has no fixed maturity date but is scheduled for mandatory exchange on 18 March 2024 , subject to the conversion conditions being satisfied. MQG also has the right (but not the obligation) to convert, redeem or resell (subject to APRA approval) the notes on the optional exchange dates (17 March 2021, 17 September 2021 and 17 March 2022).
This security contains terms known as a Non-Viability Trigger Event. Upon the occurrence of this event the security will be automatically converted into ordinary shares without the protection of conversion conditions. The holder will receive the lesser of the conversion number and maximum conversion number as outlined in section 2.3 of the prospectus. If a situation arises where conversion is not possible for any reason, holder’s rights will be terminated and the notes will lose all value.
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Source: ASX and Macquarie Group Limited
