from an email to me, Dear Investor, Offer of Westpac Capital Notes 2 opens on 15 May 2014 layout Westpac Banking Corporation ("Westpac") today announced the Offer of Westpac Capital Notes 2 ("Notes"), which are expected to be quoted on the ASX. Westpac are seeking to raise $750 million, with the ability to raise more or less. The Notes are fully paid, non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes issued by Westpac. The Notes offer a Margin expected to be in the range of 3.05% to 3.20% per annum (to be determined under the Bookbuild). The Notes will qualify as Additional Tier 1 Capital under the Australian Prudential Regulation Authority's ("APRA") Basel III capital adequacy framework. The proceeds received under the Offer will be used by Westpac for general business purposes. Westpac Capital Notes 2: Notes are fully paid with an Issue Price of $100 per Note (which will also be the Initial Face Value of the Note) that must be paid to Westpac before the Notes are issued; The Notes offer Holders floating rate Distributions until the Notes are Converted or Redeemed. The Distribution Rate is determined quarterly as the sum of the 90 day Bank Bill Rate per annum plus the Margin per annum, together multiplied by (1 Tax Rate);1 The Margin is expected to be in the range of 3.05% to 3.20% per annum and will be determined under the Bookbuild; Distributions are expected to be fully franked; Distributions are scheduled to be paid quarterly in arrears; Westpac has applied for the Notes to be quoted on ASX and the Notes are expected to trade under ASX code WBCPE; Notes do not have any fixed maturity date and could exist indefinitely (in which case you would not receive your capital back or be issued Ordinary Shares); Notes are redeemable and transferable in certain circumstances Westpac may be permitted to repay the Face Value (initially $100 per Note) of the Notes to Holders or transfer the Notes to a third party (but there are significant restrictions on repayment of the Notes). Westpac will have the Option to Convert, Redeem (if APRA gives its prior written approval) or Transfer some or all of the Notes on 23 September 2022 (refer to sections 2.5 and 2.6 of the Prospectus). Key risks Notes are not guaranteed nor are they deposit liabilities or protected accounts of Westpac under the Banking Act or Financial Claims Scheme and they are not subject to the depositor protection provisions of Australian banking legislation. The Prospectus contains details of Notes which you should read carefully. In particular, you should consider the Investment Risks set out in Section 6 of the Prospectus relating to the Notes before deciding whether to apply. Notes are hybrid securities, which means they have both equity like and debt like product features. The Australian Securities and Investments Commission ("ASIC") has published guidance which may be relevant to your consideration of Westpac Capital Notes 2 namely, information for retail investors who are considering investing in hybrid securities called "Hybrid securities and notes" (under the heading "Complex investments" at www.moneysmart.gov.au/investing). The guidance includes a series of questions you may wish to ask yourself, and a short quiz you can complete, to check your understanding of how hybrids work, their features and the risks of investing in them. OC
Almost 6%. http://cuffelinks.com.au/90-day-bank-bill-rate-2-69-3-year-bond-rate-2-49/?COLLCC=1302437135 Totally UNsecured, and not guaranteed by the guvmint. Maybe a good bet for a Fund with a LOT of confidence in the future. OC
Do you use E*TRADE? I get similar offers from them. I've seen these listed unsecured debt offerings being described as 'Equity-like risk in exchange for term-deposit-like returns'. I'm inclined to agree; not too thrilled with them. Also notice the use of the weasel-word 'Expected' at least 5 times in the initial pitch. Its not an interest rate, its 'expected to return'. Of course, as others pointed out, no deposit insurance. I recall WBC already has issued these unbacked notes before, anyone want to check their current ASX market price/liquidity? Tattersalls and Crown also issued similar notes in the past.
I think these offers are fairly common among the Big 4. This one is based on the 90 Day Bill Rate, so no guarantee as to a specific return can be given., only the margin above that. They seem to be aimed at large Funds and probably overseas investors etc. I first saw this type back about 25 or 30 years ago when Westpac issued 'Perpetual Undated Notes' which i presume are still on issue, these are the same thing. All will be fine until SHTF Day, then they can whistle for their money. JMO OC
Westpac is currently paying 3.3% on a 12 month term deposit and 2.5% on at-call savings accounts. Thumbs down.
Apart from the minimum of money in the bank account, I would not lend to ANYONE without full security, no matter what the interest rate. JMO OC
So true, when the banks' doors are closed, you can whistle for your money. But I think Cyprus and think that the government can legislate around security. Other than that minimum of money in the bank account, I've secured my wealth in physical.
