Westpac Banking (NYSE:WBK) Corp has announced its intention to bolster its capital by A$750 million through an Additional Tier 1 (AT1) bond offering, with early bids already reaching A$2.35 billion, despite falling below the indicative margin range of up to 3.30%. The notes are priced at A$100 each, and the bank is encouraging existing bondholders to reinvest, aligning with previous communications from Westpac.
The launch of this AT1 bond offer comes at a time when the financial industry is still grappling with the aftermath of the Credit Suisse (SIX:CSGN) crisis, which led to significant losses for AT1 bondholders. In response to this event and its global financial impact, the Australian Prudential (LON:PRU) Regulation Authority (APRA) began reviewing AT1 regulations in September 2023. The review follows an assurance from Assistant Treasurer Stephen Jones earlier in 2023 that Australian law protects AT1 bondholders against total losses before equity holders in the event of bank insolvency.
This move by Westpac also follows a successful issuance by Commonwealth Bank in May 2023, which raised A$1.55 billion through its own AT1 bonds post-Credit Suisse incident. The strong demand for Westpac's offering reflects continued investor confidence in Australia's banking sector and its regulatory environment.
Investors have until Tuesday, Nov 21, 2023 (0030 GMT), to participate in the new investor bookbuild process. For existing bondholders looking to reinvest, they must do so before the cutoff time on Wednesday, Nov 22, 2023 (0300 GMT). The potential interest margin for these bonds is set between 3.10% and 3.3%, with the final rate to be determined after a week-long bookbuild starting today. Moreover, Westpac has retained the option to adjust the offer size based on investor demand.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.