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New offer......Westpac SPS


Some details of the offer are as follows:

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Funds raised through the issue are to be used to bolster Westpac's capital base and the securities will qualify as regulatory capital for the purposes of APRA.
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The securities, to be known as Westpac SPS, will be issued with a face value of $100, and will pay fully franked distributions to the holder.
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The grossed up rate of the distribution will be set at a fixed margin of 2.4% over the bank bill rate.
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Given the current bank bill rate of around 7.8% we would expect a gross starting yield of around 10.2% (including the franking).
Distributions will be paid quarterly in arrears.
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The securities mature on 26 September 2013 when the securities will be converted to ordinary Westpac shares (at the prevailing price at the time) or if certain criteria are not met they may be redeemed for cash.
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In the event of Westpac being wound up, Westpac SPS rank for payment ahead of Ordinary Shares, but are subordinated to claims of Westpac deposit holders and other Senior Creditors.
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Westpac SPS have been rated ‘A+’ by Standard & Poor’s and ‘Aa3’
by Moody’s.

Despite the high yield, the Westpac SPS should be viewed as a defensive fixed income play backed by arguably Australia’s strongest retail bank.



The closing date of the offer is 23 July and the securities will commence trading on the ASX on 7 August.


For Your Information.