Heritage Bank launches $125 million ASX-listed debt transaction

Heritage Bank today announced the launch of new ASX-listed debt securities, to be known as Heritage Bank Retail Bonds, to raise approximately $125 million.

Heritage Bank Retail Bonds are five-year, senior, unsecured bonds which will pay interest at a fixed rate of 7.25% on a quarterly basis. Australia Ratings has assigned a 'BBB+' credit rating and 'Green' product complexity indicator to Heritage Bank Retail Bonds.

This is the first issue of senior, unsecured bonds to be listed on the ASX by a mutual bank in Australia. Full details of this issue are contained in an Offer Document lodged with the ASX today.

Heritage Bank intends to raise $125 million from this offer, with the ability to raise more or less. The offer is being made as part of Heritage Bank's ongoing liquidity management and funding strategy.

The Retail Bonds issue follows the successful ASX-listed Heritage Notes placement in October 2009, which was three times over-subscribed and raised $50 million in subordinated, unsecured debt securities.

Heritage Bank Chairman Mr Brian Carter said the Retail Bonds offered retail investors the opportunity to diversify their portfolio with a simply structured debt instrument that provides a fixed rate yield.

"The Heritage Bank Retail Bonds offer an attractive interest rate backed by the strength and stability of Heritage Bank.

"This offer demonstrates Heritage Bank's commitment to diversifying its funding sources, its prudent approach to liquidity management and its continued focus on providing investors with high quality products that offer excellent value.

"This transaction continues the high level of innovation and sophistication that Heritage Bank demonstrates in managing its funding mix," Mr Carter said.

The Offer is now open and comprises:

  • a Member Offer made to Eligible Members of Heritage Bank;
  • a General Offer made members of the general public who are resident in Australia;
  • a Broker Firm Offer made to Australian resident retail or high net worth clients of Syndicate Brokers; and
  • an Institutional Offer to Institutional Investors.

Institutional investors may participate in the offer by contacting the Joint Lead Managers. Commonwealth Bank has been appointed as Arranger and Joint Lead Manager for the offer. Evans and Partner and UBS have also been appointed as Joint Lead Managers. The bookbuild will be conducted on Thursday 24 May 2012 and will be a volume only bookbuild.

The closing date for the Member Offer and the General Offer is 5.00pm (Queensland time) on 13 June 2012. The Broker Firm Offer is scheduled to close at 10.00am (Queensland time) on 19 June 2012.

The minimum investment in Heritage Bank Retail Bonds is $5,000 and thereafter in multiples of $1,000.

Further information on the offer is available by calling the Heritage Bank Retail Bonds Information Line on 1300 558 416 (within Australia) or by visiting Heritage Bank Retail Bonds.

* Home loan comparison rate based on a $150,000 loan over 25 years.  Fixed loan comparison rate applies only for loans with an LVR of 80% or less and a loan amount of $150,000 to $249,999.  WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Interest rates are on a per annum basis. Rates are correct as stated and subject to change without notice. Rates shown are for new loans and do not apply to switches or internal refinances.

Home Advantage Variable rates include discounts shown from the Standard Variable rate. Home Advantage Living Equity rates include discounts from the Living Equity rate. Discounts are based on total lending in the package. Discount Variable LVR rates are for new lending and include discounts from the Discount Variable Loan Rate.  Discounts are not available in conjunction with any other interest rate discount or special offer. All fixed rates are fixed for the period stated and revert to the variable rate applying at expiration of the fixed term. To approved applicants only. Conditions, criteria and fees apply.

Loan to Value Ratio (LVR) is the loan amount divided by the value of your security property (determined by Heritage Bank at assessment), multiplied by 100. Owner Occupied loans have a maximum LVR of 95%, Investment loans have a maximum LVR of 80% and Living Equity has a maximum LVR of 80%. Heritage is not accepting any new investment applications until further notice.

This advice has been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness having regard to your objectives, financial situation or needs.

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