Wondering if anyone can give me some insight. From what I can see there is no practical difference between these perpetual notes and the earlier convertible preference shares such as NAB CPS II as described on slide 12 of the presentation.
Reading the ASX descriptions of the two instruments, they say preference shares usually convert into a fixed value of shares (face value) whereas convertible notes usually convert into a fixed number of shares. But these NAB notes convert into a fixed value of $101 rather than a fixed number, so that difference doesn't apply here.
Can anyone shed light on why these are perpetual notes and the earlier ones were preference shares? Is there any difference for practical purposes?
I'm also wondering why the margin rate is so much higher on these notes than the earlier issue of both notes and shares (4.95% vs 3.5% and 3.25% respectively). Is this just because the 90 day bank bill rate that forms the floating portion of the dividend is so low currently? Normally a higher interest rate would be indicative of higher risk but it doesn't seem to me that NAB is that much riskier now than it was.
NAB Price at posting:
$26.70 Sentiment: Hold Disclosure: Held
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