New Issue: IAG Capital Notes (Prospective ASX Code: IAGPD)

Director - Research, Consulting and Advisory, BondAdviser

Nicholas Yaxley

Director - Research, Consulting and Advisory

Australian bonds & fixed income research

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Credit

On 27 March 2017, Suncorp Group Limited (SUN) announced a new transaction, Suncorp Capital Notes (Prospective ASX Code: SUNPF). The purpose of this transaction is to provide regulatory capital but more specifically, it will be treated as Additional Tier 1 capital. The indicative size of the offer is [$250 million] but SUN retain the ability to change the issue size. The notes will be offered through a Securityholder, Broker Firm and Institutional Offer and are expected to be issued on the 5th of May 2017.These securities are structured as perpetual, unsecured, convertible, redeemable &amp; resalable, subordinated notes. Distributions are discretionary, fully franked, floating rate, non-cumulative and subject to payment conditions. These will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus an interest margin of [4.10-4.30%] set via bookbuild, multiplied by (1 – Company Tax Rate). If a distribution is not paid, SUN is prevented from paying any distributions to ordinary shareholders until full distribution is paid on a subsequent payment date.SUN is the non-operating holding company (NOHC) of all companies within the Suncorp Group. Most claims SUN has on its operating subsidiaries rank behind the operating company's creditors, hence the group is higher risk issuer than the bank, general insurance, or life subsidiaries.This security has no maturity date but is scheduled for mandatory exchange into SUN ordinary shares on 17 June 2024 (or later) subject to conversion conditions. At the issuer’s discretion, and subject to APRA approval, the notes may be exchanged (converted, redeemed or resold) on 17 June 2022. This security also contains loss- absorbing terms and conditions known as Non-Viability Trigger Event. Upon the occurrence of this event, the security will be converted into ordinary shares without the protection of conversion conditions. For the purposes of the conversion calculation, the maximum conversion number will be set at issue date. If conversion cannot occur for any reason the notes will be written off and all holders rights terminated. Summary details of the transaction are listed in the table below:

On 27 March 2017, Suncorp Group Limited (SUN) announced a new transaction, Suncorp Capital Notes (Prospective ASX Code: SUNPF). The purpose of this transaction is to provide regulatory capital but more specifically, it will be treated as Additional Tier 1 capital. The indicative size of the offer is [$250 million] but SUN retain the ability to change the issue size. The notes will be offered through a Securityholder, Broker Firm and Institutional Offer and are expected to be issued on the 5th of May 2017.These securities are structured as perpetual, unsecured, convertible, redeemable &amp; resalable, subordinated notes. Distributions are discretionary, fully franked, floating rate, non-cumulative and subject to payment conditions. These will be paid on a quarterly basis based on a calculation equal to 90-Day BBSW plus an interest margin of [4.10-4.30%] set via bookbuild, multiplied by (1 – Company Tax Rate). If a distribution is not paid, SUN is prevented from paying any distributions to ordinary shareholders until full distribution is paid on a subsequent payment date.SUN is the non-operating holding company (NOHC) of all companies within the Suncorp Group. Most claims SUN has on its operating subsidiaries rank behind the operating company's creditors, hence the group is higher risk issuer than the bank, general insurance, or life subsidiaries.This security has no maturity date but is scheduled for mandatory exchange into SUN ordinary shares on 17 June 2024 (or later) subject to conversion conditions. At the issuer’s discretion, and subject to APRA approval, the notes may be exchanged (converted, redeemed or resold) on 17 June 2022. This security also contains loss- absorbing terms and conditions known as Non-Viability Trigger Event. Upon the occurrence of this event, the security will be converted into ordinary shares without the protection of conversion conditions. For the purposes of the conversion calculation, the maximum conversion number will be set at issue date. If conversion cannot occur for any reason the notes will be written off and all holders rights terminated. Summary details of the transaction are listed in the table below:

Suncorp

New Issue: Suncorp Capital Notes