On 28 June 2022, Macquarie Group Limited (MGL; ASX: MQG) launched an offer for Macquarie Capital Notes 6 (MCN6, ASX Code: MQGPF) to raise $400 million, with the ability to raise more or less. The purpose of the transaction is to raise regulatory capital for MGL with the net proceeds intended for general business purposes.
MQGPF are structured as perpetual, subordinated, unsecured and convertible notes. Distributions are discretionary, noncumulative, floating rate payments, franked at the same rate as MGL ordinary shares (currently 40%) and payable on a quarterly basis in arrears until MCN6 are exchanged, redeemed or written- off. The margin is guided to be 3.70-3.90% p.a. above 90-day BBSW.
This security has no fixed maturity date but is scheduled for mandatory exchange into MGL ordinary shares on 12 September 2032, or the next distribution payment date on which the exchange conditions are satisfied. At the Issuer's discretion, the Notes may be resold or exchanged, or subject to APRA approval redeemed on 12 September 2029, 12 March 2030 or 12 September 2030. The Notes may also be redeemed subject to APRA approval or resold or exchanged into MGL ordinary shares if a Tax Event or Regulatory Event occurs, subject to conditions. The Notes will convert into MGL ordinary shares following an Acquisition Event, subject to conversion conditions.
We see fair value around the 345-350bps margin mark, at an offered margin of 370-390bps we recommend investors Subscribe due to the robust relative value premium at the lower bound of the guided range, along with our fundamental credit comfort.