It looks like third time lucky
French banking group Société Générale recently placed a ground-breaking deal in the Australian market. Jointly arranged by Bankers Trust Australia and Bankers Trust International, it raised A$65 million (US$50.8 million) in the form of perpetual subordinated step-up notes. Société Générale has a Standard and Poor's rating of AA- and the notes are rated at A+.
Ashley Zimpel, vice- president, originations, at Bankers' Trust Australia, says it was the first time such a transaction had been completed in Australian dollars and demonstrated the growing sophistication of Australian institutional investors.
The issue, Zimpel says, was a hybrid debt/equity-style instrument and qualified at Tier 2 capital because of its perpetual nature. One of the virtues of such an issue is that capital can be raised without watering down existing Tier 1 equity, such as occurs with new equity issues.
Bankers Trust has not disclosed the specific details of the issue. Zimpel adds that given the nature of the step-up, the notes, in all probability, would be called after 10 years.
Although the transaction is a first for the Australian market, Zimpel says there was a limited base of investors interested in such issues and they were very selective about the kinds of credit risk they would accept.