On 17 February 2020, National Australia Bank Limited (ASX: NAB, the “Issuer”) launched an offer for NAB Capital Notes 4 (Expected ASX Code: NABPG, the “Notes”), to raise $750 million, with the ability to raise more or less.
These securities are structured as perpetual, subordinated, unsecured, convertible notes. Distributions are expected to be discretionary, non-cumulative, floating rate, fully franked, and paid on a quarterly basis in arrears until converted or redeemed. The Notes will be issued on the 23 March 2020 and the purpose of this transaction is to partially refinance the existing $1.34 billion NAB Capital Notes (NABPC) and for general corporate purposes. The margin on the Notes is expected to be set between 2.95% and 3.15% p.a. above 90-Day BBSW.
This security has no fixed maturity date but is scheduled for conversion into NAB ordinary shares on 17 September 2029, or later when conversion conditions have been satisfied. At the Issuer’s discretion, the Notes may be redeemed (subject to APRA approval), transferred or converted on 17 September 2027. As this security meets the new capital instrument eligibility criteria under Basel III, it also contains the loss-absorbing terms and conditions known in the documentation as Common Equity and Non-Viability Trigger Events. The security therefore qualifies as Additional Tier 1 capital for NAB. 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 on issuance. If conversion cannot occur for any reason, the Notes will be written-off and all Noteholders’ rights terminated.
* Subject to change, expected to be $750 million, with the ability to raise more or less.
** Based on issue margin range of 2.95 to 3.15% plus a 90-Day BBSW rate of 0.9177%.
*** Based on issue margin range, an interpolated swap rate to call of 1.0180% and an expected call date of 17 September 2027.
All pricing as of close 14 February 2020.
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