New Issue: SBS Bank AUD Capital Bonds

On 29 November 2018 SBS Bank (the “Issuer”) launched SBS Bank AUD Capital Bonds ([ISIN: To Be Confirmed], the “Bonds”) seeking to raise a minimum of $20 million. These securities are sold to wholesale investors only (no prospectus being issued) and are not listed on the Australian Securities Exchange nor the New Zealand Stock Exchange. Proceeds will be used for general corporate purposes and for regulatory purposes required by the Reserve Bank of New Zealand (RBNZ). The Issuer does not qualify as an Australian authorised-deposit taking institution (ADI) and is not subject to regulation by APRA.

The Bonds are structured as direct, unsecured and subordinated redeemable shares to meet RBNZ's criteria to qualify as Tier 2 capital. Distributions are non-discretionary, floating rate and cumulative but subject to there being a current Solvency Certificate in place. The issue margin on the Bonds is guided at 3.75 – 4.00% p.a. above 90-Day BBSW, payable quarterly in arrears until redemption or maturity.

The Bonds meet the Basel III capital instrument eligibility criteria and are loss-absorbing, meaning in the occurrence of a Write-down Event, all or some of the Principal Amount of the Bonds may be written down (and principal and interest on that amount will not accrue nor be repaid). The Bonds are subordinated to the claims of priority creditors in the capital structure and rank equally amongst themselves and other unsecured subordinated debt of SBS Bank.

The Issuer has the right (but not the obligation) to redeem the Bonds at the first optional call date (6 December 2023) but is legally obliged to redeem the Bonds at the legal final maturity date (6 December 2028). Early redemption may also occur if a Regulatory or Tax Event occurs. Early redemption is subject to RBNZ approval and the Issuer notifying bondholders.

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

Product Type

Corporate Bonds

Last Price


Issue Size*




Par Value


Capital Price


Fixed / Floating


Running Yield**

[5.695 - 5.945%]

Payment Frequency


Yield to Call***

[6.233 - 6.483%]

Current Distribution


Trading Margin

[3.750 - 4.000%]

Issue Margin / Coupon

[3.750 - 4.000%]

Optional Call Date

6 December 2023

Franking Credits Inclusive


Legal Final Maturity

6 December 2028

ASX Listed

No (ISIN: To be confirmed)

Next Ex-Date

27 February 2019



Next Payment Date

6 March 2019

GICS Sector


Next Cash Distribution



*Size is subject to final demand. **Based on a prospective trading margin of 3.75 - 4.00% plus 90-Day BBSW of 1.945%. ***Based on a prospective trading margin of 3.75 - 4.00% and an interpolated swap rate of 2.483% priced to the optional call date (6 December 2023).

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Term Sheetpdf | 63 KB
Information Memorandumpdf | 756 KB
Fitch Reportpdf | 290 KB
Deed Pollpdf | 472 KB