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- Suncorp is set to raise a quarter of a million dollars through the issue of hybrid notes
- The insurance and banking giant can raise more or less than the intended amount if it chooses
- The cash will be used to fund the capital needs of at least one Suncorp entity
- Suncorp shares are up 1.24 per cent in late trade, worth $13.51 each
Insurance and banking giant Suncorp has plans to raise a quarter of a million dollars through the issue of Capital Notes.
Suncorp has the ability to raise more or less than the announced $250 million and said the Capital Notes 3 to be issued are fully paid, perpetual, unsecured, subordinated, and mandatorily convertible.
Essentially, this means the notes do not have a redemption date but must be converted into common stock by a date set out by Suncorp; the issued notes act as hybrid securities with the characteristics of both debt and shares and paying interest rates to holders.
Suncorp said the cash raised will be used to “fund the capital needs of one or more regulated entities within the Suncorp Group” and for general capital.
Some big names are getting behind the raise, with Goldman Sachs acting as Arranger, and Commonwealth Bank, Morgans National Australia Banks, UBS, and Westpac taking on the role of Lead Managers.
Generally speaking, capital notes carry more risk than other types of investment or corporate debt.
Capital noteholders have the lowest priority among investors, meaning holders will be paid out only after secured noteholders with the bank are paid should the bank end up closing shop.
Still, Suncorp’s raise falls under tier-one capital for regulatory purposes, and capital notes issues tend to raise more than the highlighted amount.
Suncorp shares are up 1.24 per cent in late trade, worth $13.51 each in a $17.02 billion market cap.
