Macquarie Bank Limited (“Macquarie”)
Debt Instrument Programme dated 18 June 2014 and supplemental offering circular dated 7 November 2014
Dated 3 March 2015
Nature of the Bonds
Direct, unsecured and unsubordinated obligations of Macquarie and rank pari passu without any preference among themselves and rank at least equally with the claims of its unsecured and unsubordinated creditors, except creditors mandatorily preferred by law. The bonds are not protected accounts for the purposes of the Banking Act. In addition, the bonds are not guaranteed or insured by the Australian Government or under any compensation scheme of the Australian Government, or by any other government, under any other compensation scheme or by any government agency or any other party.
3.25% per annum, payable semi-annually (in two coupons of 1.625%) in arrears on 3 March and 3 September in each year, including the Maturity Date.
Repayment at Par on the Maturity Date
On the Maturity Date, bondholders are scheduled to receive the Face Value and the final Coupon Payment for the last Interest Period.
The value of an investment in the bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect Macquarie’s financial performance. The following risks may also affect an investment in the bonds:
- Lack of liquidity – in the secondary market for the bonds;
- Funding risk: if capital markets are unstable, Macquarie may not be able to refinance the bonds in a timely or efficient manner
- Interest rate risks – bondholders may suffer unforeseen losses due to fluctuations in interest rates;
- Regulatory risks – The banking industry in Australia is highly regulated, and regulatory changes may adversely impact affect Macquarie’s financial performance;
- Litigation risks – Risks relating to litigation and regulatory actions;
- Operational risks – The risk of loss resulting from inadequate internal processes and controls, people and systems or from external events;
- Default risk – if an event of default occurs under the bonds, or Macquarie fails to perform any obligation in relation to the bonds, such event or failure may impact on the value of an investment in the bonds, the transferability of the bonds and the ability of a holder to recover amounts due under the bonds.
Key benefits include:
- interest paid semi-annually in arrears;
- interest paid is fixed rate;
- interest paid as 100% cash;
- interest is not deferrable nor are interest payments discretionary;
- rank equally with all other senior and unsecured creditors of the Issuer.
Early Redemption by Issuer
Yes, for tax reasons
So long as the bonds remain outstanding, the Issuer will not create any mortgage, charge, pledge, lien or other form of encumbrance or security interest (“Security Interest”) upon the whole or any part of its present or future assets or revenues or those of any of its subsidiaries as security for any relevant indebtedness or any guarantee or indemnity (“Guarantee”) given in respect of any relevant indebtedness unless prior to or simultaneously therewith, the Issuer either:
(a) grants or procures to be granted a Security Interest or Security Interests securing its obligations under the bonds which will result in such obligations being secured equally and rateably in all respects so as to rank pari passu with the applicable relevant indebtedness or Guarantee; or
(b) grants such other Security Interest in respect of its obligations under the bonds as shall be approved by an Extraordinary Resolution.
Events of Default
Events of Default include:
- Payment Default: Applicable with a 14 day cure period for interest and principal payments
- Breach of other obligations: Applicable, with a 21 day cure period;
- Insolvency / Winding Up: Applicable;
- Illegality: it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under the bonds;
- Cessation of business: the Issuer ceases or threatens to cease to carry on its business, or ceases or threatens to cease payment of its debts generally;
- Receiver: a receiver, receiver and manager, administrator, liquidator, official manager, trustee or similar officer is appointed in respect of all or any part of the assets of the Issuer and such appointment is not terminated within 21 Business Days.