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National Australia Bank is calling in $449.7 million of BNZ Income Securities perpetual shares which pay a coupon of 9.89 percent, the highest of any hybrid security traded on the NZX Debt Market.
The perpetual non-cumulative shares were issued on March 28, 2008, when prevailing interest rates were much higher. For example, New Zealand two-year swaps have tumbled more than 5 percentage points since then.
NAB is exercising its right to call the securities on their fifth anniversary and has asked NZX to halt trading in the shares between March 14 and the transfer date of March 28. They last traded at $1.01 per $1 face value, according to NZX.
The call leaves ANZ Bank New Zealand as the issuer of the hybrid with the highest coupon – 9.66 percent – also sold in 2008. Their first call date is April 18. ANZ spokesman Peter Barnao said last month that no decisions had been made yet on the perpetual bonds.
ANZ last year called and repaid $350 million of subordinated bonds issued in 2007 with a coupon of 8.23 percent. BNZ also called $350 million of subordinated bonds sold in 2007 with a coupon of 8.42 percent.