Hybrid Securities

Hybrid Securities

We offer innovation in hybrid securities

In the new era of bank hybrid capital for global banks, international institutions are looking to boost their tier one capital levels to meet Basel III capital requirements. This has led to a surge in hybrid and listed debt raisings that has been met with a strong response from investors on the hunt for high-yield products.

The hybrid trend is most prominent in Australia, particularly among financial institutions; however, Europe, Hong Kong and China have also seen hot spots of hybrid activity and each have their own set of unique regulatory rules and requirements.

Issuers and investors rely on our advice to develop, issue, or invest in, hybrid securities. King & Wood Mallesons has structured and executed hybrid products for all of the major Australian banks and a number of other financial institutions, helping to develop products which meet the Australian Prudential Regulation Authority’s (APRA) Basel III Prudential Standard. In Asia, we’ve helped clients to navigate the particularly difficult regulatory issues relating to Tier 2 products in the PRC and structuring products for the Hong Kong market that will be advantageous from a Basel III perspective.

King & Wood Mallesons brings together some of the leading minds in the industry to develop and execute hybrid security financing solutions – we have specialists in debt capital markets, equity capital markets, securitisation, derivatives, financial services regulation, and tax. It means we can advise on the full range of wholesale and retail transactions, assisting with the issuance of all forms of hybrids. These include preference shares, subordinated debt, capital notes, convertibles and stapled structures.

With experience across all segments of the industry, our team covers regulated financial institution issuance, project and infrastructure transactions and general corporate issuance.

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Our work highlights include acting for:

  • QBE on its US$850 million listed zero distribution yield accreting senior convertible securities due 2030
  • AED Oil on its US$20 million multi-tranche convertible notes issued by private placement
  • ANZ on its AUD 1 billion offer of new Tier 1 hybrid securities
  • Suncorp on its AUD 770 million Suncorp Subordinated Notes and AUD 560 million CPS2
  • Commonwealth Bank of Australia on its first AUD 500 million retail bond issue
  • Suncorp-Metway on its AUD 735 million Tier 1 convertible preference shares
  • CLP Power Hong Kong Limited – Acted for the issuer and guarantor on the issue by CLP Power HK Finance Ltd. of US$500,000,000 perpetual subordinated guaranteed capital securities. This was CLP’s inaugural hybrid offering, and had the lowest coupon ever on a hybrid issued by a corporate out of Asia
  • ICBC International Investment Management Limited – US$50 million investment by ICBCI into a company listed on the Main Board of the Stock Exchange by way of two secured fixed-coupon convertible notes
  • HSBC – Acted for the client as trustee (in respect of certain zero coupon exchangeable bonds) with the enforcement of security (shares) in Japan following dematerialisation of those shares. The bonds were guaranteed by a Hong Kong listed company.

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