Macquarie Bank Ltd has successfully launched and priced its anticipated subordinated debt (Tier 2) issuance. The offering comprises two types of 10.5NC5.5 Notes, with a 10.5-year final maturity and an initial call option after 5.5 years. Investors can choose between a floating rate option and a fixed-to-floating rate option, both structured with the expectation of redemption at the 5.5-year call date.

The Indications of Interest (IOI) exceeded A$3.95 billion, with A$2.65 billion in initial interest to the floating rate option and A$1.3 billion to the fixed-to-floating rate option. The issue margin, initially set at 200 basis points, was ultimately narrowed to 185 basis points.  Upon the end of bookbuild, Macquarie decided that the fixed-to-floating tranche will carry a coupon of 5.603% per annum with an issue size of A$350 million, while the floating tranche pays 3-month BBSW plus 185 basis points with an issue size of A$900 million.

This issuance follows recent developments within Macquarie Group, including indications about a new capital notes offer. Macquarie’s 23-24yr half year presentation highlights a well-diversified funding base, with a significant increase in Tier 2 subordinated debt over the past year. As of September 2023, Macquarie’s subordinated debt reached A$7.1 billion, up from A$5.7 billion in September 2022, reflecting the bank’s strategic focus on strengthening its capital structure and enhancing financial stability.