Yield investors are set to plough into the latest hybrid issue from Commonwealth Bank, PERLS VII Capital Notes. The $2BN + issue is set to be a record for the hybrid market, as it is accompanied with a re-investment offer for the holders of the PERLS V securities.
At a likely margin of bank bill plus 2.8%, this is lower than recent new issues (Westpac issued in June at a margin of 3.05%), although due to the insatiable demand for yield, it is above where hybrid securities have been trading recently on the secondary market through the ASX. To give a slightly longer-term perspective, CBA issued PERLS VI at this time two years ago – then paying a margin of 3.8%.
The PERLS VII Capital Notes are structured to ensure that they qualify as ‘Additional Tier 1 Capital’ for the Commonwealth Bank, and employ very similar structures to the Westpac Capital Notes (WBCPD or WBCPE), ANZ Capital Notes (ANZPD or ANZPE), National Australia’s CPS (NABPA or NABPB) and Commonwealth’s PERLS VI (CBAPC).