Macquarie Capital Notes 3 (MCN3)

May 19, 2018 | Upcoming IPO's

Macquarie Group (MQG) has announced the IPO of a new Additional Tier 1 (AT1) capital hybrid (under Basel III) Macquarie Capital Notes 3 (MCN3). Further, the holders of existing Macquarie Capital Notes (MQGPA) will have the opportunity to rollover into the new security. The new securities by definition are perpetual (however, are normally redeemed or rolled over into new issuances), convertible, subordinated and unsecured. As with all new structures, the securities have the non-viability clause, meaning the securities can be converted into ordinary shares or written off in times of significant financial stress.

Macquarie Capital Notes 3 (MCN3) Margin

The new securities will offer a margin of 4.0% above the 90d BBSW (which was determined via bookbuild) and distributions will be paid quarterly. The offer size is $600m, with the ability to raise more. Distributions are discretionary, non-cumulative and are expected to be franked at the same rate as the dividends (45%). Subject to all the conditions being met, the new securities will exchange into ordinary shares on 15 December 2027 (approximately in 9.6 years), however the Company can call these securities on the first call date of 15 December 2024 (approximately in 6.6 years). Investors in MQGPA can reinvest into the new offer and receive a final distribution of $2.4747 per security. Whilst the new securities pay the same margin as MQGPA, the new securities pay quarterly distribution versus MQGPA semi-annual. On our numbers, the MQGPC offer a cash running yield of 4.97% and yield to first call date of 6.73%. On our estimates, the pricing (4.0% margin) appears attractive relative to the average yield to first call trading margin of 3.73% of all mandatory convertible securities within our universe (including banks). Further, if we took just the non-bank Basel III securities in our universe, MQGPC’s margin of 4.0% again screens attractively against the group average of 3.84% (yield to first call trading margin). The two latest IPOs (WBCPH and CBAPG) in the sector are trading below par value, with the yield to call trading margins on WBCPH and CBAPG increasing towards the 4.0% being offered by the new Macquarie Capital Notes 3.

Request a copy of Macquarie Capital Notes 3 (MCN3) Prospectus

To receive a copy of the prospectus, please register your details below.

Upcoming IPO’s

Here you’ll find just some of our past ideas and upcoming IPO’s.

For full access register below.

Cadence Opportunities LIC (IPO)

Cadence Capital are currently raising capital for their new LIC, the Cadence Opportunities Fund (ASX: CDO). The fund has received the highest available recommendation “Recommended” by Independent Investment Research. Cadence are an independent boutique asset manager,...

1414 Degrees IPO – Improving the renewable energy sector

1414 Degrees are looking to raise up to $50,000,000 at 35 cents per share. Their technology is clean, sustainable, scalable, low cost and has a 20 to 30-year life. For more information on the 1414 Degrees IPO or to receive a copy of the prospectus please register your...

WAM Global IPO lead by Catriona Burns

The WAM Global IPO lead by Catriona Burns aims to provide capital growth over the medium to long term and deliver a stream of fully franked dividends whilst still preserving capital by investing in a diversified portfolio of undervalued growth companies. The Fund aims...

Here’s what you

will get if you subscribe

to our three month trial

Small, Mid and Large Cap Trading Ideas

Options Trading Ideas

Warrant Trading Ideas

Access to IPO’s

Access to 708 Deals

Phone calls with ideas (only if you want them)

Access to Research

Global Thematic Reports

Weekly Credit Reports

Trading Strategies and Education

Trading Equities Pty Ltd is an Authorised Representative of Vested Equities Pty Ltd ABN 54 601 621 390 AFSL 478987. All advice (if any) is general advice only. Your personal circumstances and financial objectives have not been taken into consideration. Accordingly you should consider if the advice is right for you. Past performance is not a reliable indicator of future performance. Please be aware that all investment and trading activity is subject to both profit & loss and may not be suitable for you. All advice and education content is of the nature of general information only and must not in any way be construed or relied upon as legal, financial or personal advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. Investing and Trading involves an inherent level of risk. The decision to trade or invest and execution methods employed are a personal decision. You must obtain your own advise and undertake your own research when making investment decisions regarding the suitability of a product for your circumstances.

© Copyright 2017 Trading Equities Pty Ltd ABN 55 605 460 811