ASX kicks off meetings for bond deal; three banks mandated
ASX, Australia’s stock market operator, has tapped UBS, ANZ and NAB to drum up interest in a potential bond deal.
ASX managing director and CEO Helen Lofthouse. Dominic Lorrimer
A message sent to potential investors on Monday said the exchange and its bank syndicate would kick off investor meetings on Tuesday. On the agenda is a three-year Australian dollar, senior unsecured, floating rate transaction.
The bond was flagged by ASX chief executive Helen Lofthouse in a speech last week, saying the exchange expected to raise between $200 million and $300 million from the bond markets in the first quarter of the 2024 financial year.
Proceeds will be used to support the ASX’s capital expenditure program as it seeks to modernise its technology offering. The exchange has been grappling with the fallout from a disastrous attempt to replace its ageing clearing and settlement infrastructure known as CHESS, which will be sustained until 2032. It has said urgent technology upgrades are at the top of ASX’s investment agenda.
The ASX is sitting on a $300 million working capital bank facility and is rated AA- (stable) by S&P. UBS, ANZ and NAB have been mandated as joint lead managers.
Fat margin
Also toiling away in debt capital markets was Judo Bank. The business lending specialist revealed plans to raise its first-ever AT1 hybrid earlier this month, seeking to put itself in league with the more established banks on funding.
The deal was launched on Monday morning, with expectations to raise around $75 million for regulatory capital with trading margin expected to be in the range of 6.25 per cent to 6.50 per cent. This puts the running yield at around 10.5 per cent to 10.7 per cent with the first call date set for February 2029.
Fixed income analysts BondAdviser have issued the security a “Subscribe” recommendation with a “Very High” risk rating. It forecasts the Tier 1 capital will make up around 0.6 per cent of the bank’s capital strategy.
“Our research shows this deal to be offered at the highest ever margin on Australian dollar AT1 primary,” BondAdviser said in a note seen by Street Talk.
“Crucially, we have fundamental credit comfort with the issuer, given the strong capitalisation and improving profitability, however we highlight the security has a Very High risk score.”
Judo has called up Barrenjoey, E&P Advisory, Morgans Financial and Westpac as joint lead managers. The books open today and are due to close on Friday.
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