On the 21st of November 2016 Insurance Australia Group Limited (IAG) announced a new transaction (click here for announcement), IAG Capital Notes (Prospective ASX Code “IAGPD”). The purpose of this transaction is to provide regulatory capital for the group but more specifically it will be treated as Additional Tier 1 (AT1) capital for regulatory purposes. These securities are structured as perpetual, unsecured, convertible, redeemable & resalable, subordinated notes. Distributions are discretionary, expected to be fully franked, floating rate, non-cumulative and subject to payment conditions. Distributions will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus a margin multiplied by (1 – Current Company Tax Rate). The projected margin range is expected to be 4.70 – 4.90% per annum.
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