Largest mutual bank senior debt deal raised

Heritage and People’s Choice – soon to be trading under the new brand of People First Bank – has raised $400 million from the capital markets via a three-year medium-term note (MTN) transaction.

The senior unsecured floating rate transaction is believed to be the largest senior unsecured issue printed by a mutual bank in Australia.

The issue was priced at 3m BBSW + 160 bps, with total bids by investors exceeding $600 million prior to the final sizing of the transaction.

Nearly 60 investors participated in the transaction, with more than half of the issue taken up by domestic fund managers.

“This is an excellent outcome that reflects the market’s resounding support of our strategy, and the enormous opportunity ahead for our bank and the mutual sector more broadly,” said chief executive Peter Lock.

“In setting a new record for the sector, it’s clear investors are confident and excited about the new bank we are building and our compelling proposition as a national purpose-driven, customer-focused banking organisation.

“We have committed to being an annual issuer in both the senior and RMBS markets and we are extremely pleased to have had an exceptionally strong start across both programmes.”

The new funds will reportedly be used for general funding and liquidity and to assist in the repayment of the remaining Term Funding Facility due to the Reserve Bank through to mid-2024.

The latest deal followed the bank’s successful inaugural residential mortgage-backed security (RMBS) transaction last August, which secured $1 billion from domestic investors.

Heritage and People’s Choice was formed on 1 March 2023 through the $23 billion merger of People’s Choice and Heritage Bank, creating Australia’s largest mutual bank.

It will begin introducing elements of its new People First Bank brand from March this year.

[Related: Heritage and People’s Choice reveals new name]