CBA has launched a new tier one hybrid security, PERLS X, with a margin expected to be set between 3.4 per cent and 3.6 per cent above the 90-day bank bill swap rate. The PERLS X Capital Notes will aim to raise $750 million of tier one capital for the CBA, the same amount announced by Westpac on 6 February 2018 with the launch of its Capital Notes 5 offer. CBA’s new hybrid will be issued on 6 April 2018 with a margin expected to be set between 3.4 per cent and 3.6 per cent above the 90-day bank bill swap rate (BBSW).
As at 7 March, the 90-day BBSW mid-point rate was 1.845 per cent – making the PERLS X likely to begin trading with a distribution between 5.245 per cent and 5.445 per cent. The PERLS X securities – which are structured as perpetual, subordinated, unsecured, convertible notes – have no fixed maturity date but are scheduled for mandatory conversion into CBA ordinary shares on 15 April 2027. The hybrid meets the capital instrument eligibility criteria of Basel III under contain loss-absorbing terms and conditions for Capital Trigger Events and Non-Viability Trigger Events.
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