Macquarie Bank Launches Subordinated Debt Issuance Amid Strong Market Demand

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.