New Issue: NAB Subordinated Notes 2

On 8th February 2017, National Australia Bank (NAB) announced a new transaction, NAB Subordinated Notes 2 (ASX Code: NABPE). The purpose of this transaction is to provide Regulatory Capital for the group but more specifically, it will be treated as Tier 2 capital. The indicative size of the offer is [$750 million] but NAB retain the ability to change the issue size.

The notes will be offered to eligible holders of NAB Subordinated Notes (ASX: NABHB) to reinvest their capital, security holders, brokers and institutional investors.

These securities are structured as direct, subordinated and unsecured notes. Distributions are non-discretionary, floating rate, unfranked and cumulative but subject to the solvency test. Distributions will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus a margin. The margin will be set at book build with the current guidance being [2.20-2.30%].

Summary details of the transaction are listed in the table below:

Product Types

Last Price

$100.00

Issue Size*

[$750,000,000]

Accrued

$0

Par Value

$100

Capital Price

$100.00

Fixed / Floating

Floating

Running Yield**

[3.97-4.07%]

Payment Frequency

Quarterly

Yield to Maturity***

[4.92-5.02%]

Current Distribution**

[3.97-4.07%]

Trading Margin*

-

Issue Margin****

[2.20-2.30%]

Optional Call Date

[20 September
2023 (6.5Y)]

Franking Credits Inclusive

No

Legal Final Maturity

[20 September
2028 (11.5Y)]

ASX Listed

Yes (Prospective ASX Code: NABPE)

Next Ex-Date

-

Convertible

No

Next Payment Date

[20 June 2017]

GICS Sector

Banks

Next Cash Distribution****

$1.00

*Issue size is expected to be [$750 million] **Based on prospective issue margin below plus 90-Day BBSW of ~[1.770%]. ***Based on prospective issue margin of [2.20 - 2.30%] & interpolated swap rate to the call of [2.724%]. ****Actual cash amount based on $100 face value. 

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