It's just a hybrid security. They take the money, invest or hold the cash depending on their requirements at any point in time, and pay out a interest distribution to the investor.
At the maturity date they might pay you out, or the securities get turned into shares (at current market cap it would be an dilution of just over 1%).
Each PERLS issue has slightly different finer points, but the use is always the same "maintaining APRA Tier 1 levels & diversity".
They get automatically turned into shares if CBA suffers major liquidity issues.
To dumb it down to the base level, it's basically a bond. You're buying a security that will pay you an interest dividend, and likely to be paid back the face value (initial face value is $100 at issue) at the maturity date, or the option to roll it over into the new PERLS offer they have when this one closes.
They've run a dozen of these now, it's nothing special or worrying.
CBA Price at posting:
$86.40 Sentiment: None Disclosure: Held
(20min delay)
