Last week NAB announced they were to withdraw a capital issue due to market conditions. Today they announced the conversion of 7,500,00 NAB Capital Notes which were issued on 23 March 2015, and issued 35,140,972 fully paid ordinary shares in connection with the conversion at a price of $21.342608.
The original securities were paying 3.5% plus bank bill rate less the tax rate, so would be quite expensive relative to other funding mechanisms. They are also due for conversion no later than 23 March 2022, but had an optional conversion on 23 March 2020, which NAB exercised.
I see some claiming this is a sign of distress, I disagree, it is a convenient and effective method of enhancing capital, ahead of pressures ahead. Yes, it is a conversion, but tagging it a “bail-in” is in my view inaccurate. The share price of the conversion was higher than the market price.
That said, in a falling market NAB shares were down around 10%.
Here is the release from NAB.
