On 18 September 2024, MAFG Finance Pty Limited launched an offer of Senior Unsecured Notes II, seeking to raise $40 million, with the ability to raise more or less. It is not intended that the Notes be listed or quoted on any stock or securities exchange.
The Notes will be guaranteed on a joint and several basis by the Issuer along with a group of subsidiaries which includes the parent company, MA Financial Group (ASX: MAF), and each entity that provides a guarantee under the existing working capital facility, as well as any future refinancing of that facility. The Notes will rank pari passu with all present and future unsecured and unsubordinated obligations of the group of Guarantors. Proceeds are for general corporate purposes including the full repayment of the existing $40 million MA IV Notes.
Interest payments are non-discretionary, on a fixed basis and paid semi-annually in arrears with an indicative coupon guided at 8.00% (indicative margin: 452bps) beginning on 30 March 2025. Investors are protected by a Negative Pledge, a Financial Covenant whereby debt to tangible assets of the operating balance sheet cannot exceed 55%, a Dividend Stopper, Event of Default, and Change of Control mechanisms. Should a Change of Control event subsist, Noteholders have the right to require the Issuer to redeem its Notes held at 101% of par. The Issuer has the right but not the obligation to redeem all or some of the Notes prior to maturity at every interest payment date starting at 102.0% of par on 30 September 2026 and then at 100.0% of par from and including 30 March 2027. The legal final maturity date is 30 March 2029.
We recommend investors Subscribe. From a relative value perspective, we arrive at a fair value trading margin estimate of 455-460bps using our shadow rating, a range of comparable issuers in both the high-yield and investment-grade markets and pricing Notes I in both call and maturity scenarios. That said, we see scope for margin compression on successful delivery of management’s FY26 roadmap and implied deleveraging at a corporate level as the Group scales. On this basis, we argue the Notes will eventually trade to the low-400bp margin range before becoming call-constrained (callable at 102% from 30 September 2026 before stepping down to par from 30 March 2027). A comprehensive discussion is found in Relative Value Analysis.
