Heritage and People’s Choice $400 million senior debt deal the largest of its kind by an Australian mutual

2 February 2024

Heritage and People’s Choice $400 million senior debt deal
the largest of its kind by an Australian mutual

Australia’s leading mutual bank, Heritage and People’s Choice – soon to be trading under the new brand of People First Bank – has raised $400 million from the capital markets via a 3-year senior unsecured floating rate MTN transaction.

This transaction is the largest senior unsecured issue printed by a mutual bank in Australia, effectively establishing a new benchmark for the mutual banking sector.

The issue was priced at 3mBBSW + 160bps, with total bids by investors exceeding $600 million prior to the final sizing of the transaction.

“This is an excellent outcome that reflects the market’s resounding support of our strategy, and the enormous opportunity ahead for our bank and the mutual sector more broadly,” said CEO Peter Lock.

“In setting a new record for the sector, it’s clear investors are confident and excited about the new bank we are building and our compelling proposition as a national purpose-driven, customer-focused banking organisation.”

Nearly 60 investors participated in the transaction, with more than half of the issue taken up by domestic fund managers.

The latest deal follows the bank’s successful inaugural residential mortgage-backed security (RMBS) transaction last August, which secured $1 billion from domestic investors.

“We have committed to being an annual issuer in both the senior and RMBS markets and we are extremely pleased to have had an exceptionally strong start across both programmes,” Mr Lock said.

The new funds will be used for general funding and liquidity and to assist in the repayment of the remaining Term Funding Facility due to the Reserve Bank through to mid-2024.

Heritage and People’s Choice was formed on 1 March 2023 through the $23 billion merger of People’s Choice and Heritage Bank, creating Australia’s largest mutual bank. It will begin introducing elements of its new People First Bank brand from March this year.