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Macquarie Bank Capital Notes 2

Macquarie Bank Limited (Macquarie) has announced it is seeking to raise $500 million(1) through the issue of Macquarie Bank Capital Notes 2 (BCN2)(2).

Macquarie Bank Capital Notes 2 may be suitable for investors looking for regular partially franked income by way of floating rate distributions. BCN2 may also offer investors the opportunity to further diversify their income portfolio.

The Offer includes a Reinvestment Offer to all eligible Macquarie Bank Capital Note (BCN) Holders (ASX: MBLPA). The record date for Eligible MBLPA holdings is 7 February 2020. You should note that Macquarie BCN Units are expected to be redeemed for $100 per BCN on its first Redemption Date of 24 March 2020 for holders who do not elect to reinvest (subject to various factors including any required regulatory approvals).

BCN2 are a complex investment and may be difficult to understand, even for experienced investors, and involve different risks from a simple debt or ordinary equity security. You should ensure that you understand the BCN2 Terms and risks of investing in BCN2 and consider whether it is an appropriate investment for your particular circumstances.

It is important that you read the Prospectus in full before deciding to invest in BCN2.

Key features of the offer

  • Opportunity to participate in the Broker Firm offer via Morgans as a Joint Lead Manager to the Offer
  • Opportunity to re-invest MBLPA sale proceeds ($100 per Note) into Macquarie Bank Capital Notes 2 ($100 per Note) and maintain an exposure to Macquarie Bank beyond the redemption of MBLPA
  • Macquarie Bank Capital Notes 2 have a face value of $100 and are redeemable by the issuer on 21 December 2025, 21 June 2026 and 21 December 2026(3)
  • If not redeemed before, Macquarie Bank Capital Notes 2 will convert into Macquarie Group Limited ordinary shares on 21 December 2028(4)
  • Quarterly (partially franked) gross distributions(5) equal to the 3 Month Bank Bill Rate plus a margin of 2.90%(6) i.e. approximately 3.80% p.a.(7)
  • Distributions are discretionary, non-cumulative and subject to the Payment Conditions outlined in the Prospectus but must be paid ahead of ordinary share dividends, and if not paid, dividends and capital restrictions apply to ordinary shares
  • At the issue date, Macquarie Bank Capital Notes 2 will constitute APRA eligible regulatory capital instruments and contain Automatic Exchange Events (Common Equity Tier 1 Trigger Event or a Non-Viability Event) which may impact their value in certain circumstances(8).
  • Will be quoted on the ASX under the code MBLPB(9)

Issuer: Macquarie Bank Limited (MBL)

Transaction: Tier 1 Capital Notes Offer

Morgans Role: Joint Lead Manager

Offer Size: $500 million

Offer Opens: 19 February 2020

Morgans closing date for Broker Firm New offer: [14 February 2020]

Investors should note that investments in Macquarie Bank Capital Notes 2 are an investment in Macquarie Bank Limited (MBL) and may be affected by the ongoing performance, financial position and solvency of MBL. BCN2 are not deposit liabilities and are not protected accounts of MBL under the Banking Act 1959 (Cth) and are not guaranteed or insured by any government, government agency or compensation scheme of Australia or any other jurisdiction. Other than MBL, no member of the Macquarie Group is an authorised deposit-taking institution (“ADI”) for the purposes of the Banking Act. The investment performance of BCN2 is not guaranteed by MBL, Macquarie Group Limited (“MGL”) or any other member of the Macquarie Group.

There are a number of risks associated with an investment in BCN2, many of which are outside the control of MBL. Before applying for BCN2 all investors should consider whether BCN2 are a suitable investment for them including by considering the key risks as outlined in sections 1.3 and 5 of the Prospectus. There are also a number of differences between BCN and BCN2 outlined in section 3.4 of the Prospectus which you should be aware of before deciding to participate in the Reinvestment Offer.

  1. Macquarie may issue more or less than $500 million of BCN2.
  2. Morgans will receive fees for its role.
  3. If an Optional Exchange Date falls on a non-business day then it is deferred to the next business day. Subject to APRA approval.  BCN2 are perpetual and do not have a fixed maturity date. If BCN2 are not Exchanged, Redeemed or Written-Off, they could remain on issue indefinitely and the Issue Price may not be repaid.
  4. Conversion is subject to conversion tests as outlined in the prospectus.
  5. Distributions are non-cumulative, paid at the discretion of Macquarie and subject to payment tests.
  6. Margin is set via the bookbuild and may set outside this range.
  7. Based on 3 Month Bank Bill Rate of 0.90%
  8. Such conditions may in certain circumstances impact the security's value; full detail is contained in the Prospectus and Morgans Offer Summary.
  9. Application will be made to list BCN2 on ASX.

More information

Investors should read the Prospectus in full to understand the features and risks of Macquarie Bank Capital Notes 2. Application for Macquarie Bank Capital Notes 2 can only be made by completing the application form attached to the Replacement Prospectus.

If you have any questions about the offer, please contact your Morgans adviser, call 134 226 or find your nearest office.

Download Prospectus

[Name of deal] are being offered only in Australia and the Prospectus will only constitute an offer to a person receiving it in Australia. Not for distribution, directly or indirectly, in the United States or to, or for the account or benefit of, US Persons, except in accordance with an available exemption from the registration requirements of the US Securities Act. The distribution of the Prospectus (including an electronic copy) in jurisdictions outside Australia may be restricted by law.

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