Westpac 4.65% Tier 2 10NC5 SGD

Shawn Sng  |   30 Aug 2022  |    538 views

Westpac Banking Corporation have just announced the issuance of its Tier 2 10NC5 subordinated notes at a final price guidance of 4.65%. These bonds can be redeemed only after 5 years and carry a maturity date of 10 years at 7 September 2032. If these bonds are not called on 7 September 2027 (5 years), these bonds will be reset at the prevailing 5 year SORA OIS plus the initial margin of 1.751%. The primary method of loss absorption for this issuance is conversion and can be subjected to possible write off. Therefore, upon a non-viability trigger event, the issuer may be required to convert all or some subordinated instruments. If this conversion does not occur when deemed necessary within 5 business day of the non-viability trigger event, then the relevant Holders’ rights and claims in relation to such subordinated instruments are immediately and irrevocably written off. Any early redemption is subjected to APRA’s prior written approval. The bonds comes with a semi-annual coupon repayment schedule at every 7 March and 7 September each year with the first payment set on 7 March 2023.


A non-viability event is considered when a written determination from Australian Prudential Regulation Authority (APRA) deems that the issuer will require:

  • Conversion or write-off of subordinated Instruments or conversion, write-off or write down of relevant securities is necessary because, without it, the Issuer would become non-viable.
  • A public sector injection of capital, or equivalent support, is necessary because, without it, the Issuer would become non-viable


Westpac is an Australian bank and financial services provider headquartered in Sydney, Australia, with a market cap of AUD 74.676bn as of 30 August 2022. Westpac is considered one of the four major banking organizations in Australia and comprises six major divisions: Consumer; Business; Westpac institutional bank (WIB); New Zealand; Group business and Specialist business. The bank is listed on both the Australian and New Zealand Stock Exchange (ticker: WBC). Westpac has a credit rating of Aa3/AA-/A+ (Moody’s/S&P/Fitch) and the expected rating for this issuance is Baa1/BBB+ (Moody’s/S&P).


For the first half ended 30 June 2022 (1H2022), Westpac net operating income was recorded $10.2bn, approximately 4.2% lower YoY as compared to $10.6bn 1H2021. Net Profit attributable to owners also experienced a decline of 5% YoY from $3.44bn in 1H2021 to $3.28bn in 1H2022. This reduction was mainly due to a $511 million turnaround in impairment charges, which resulted in a lower net profit in 1H2022. Net interest margin for the group decreased by 24 bps from 1H2021. This decline was mainly due to a decrease from loans due to lower spreads on new mortgage lending, competition, and increased volume of lower spread products. Additionally, unfavourable changes in the portfolio mix from reduced balances in higher spread personal lending also contributed to the lowering of net interest margin.


In terms of credit views, Westpac bank’s 3Q2022 CET1 ratio stood at 10.75%. This is slightly lower than the previous quarter’s CET1 ratio of 11.33% due to payment of the 2022 interim dividend; an increase in interest rate risk in the banking book (IRRBB) risk weighted assets (RWA) from increased market interest rates over the quarter; and higher deductions for capitalized software and other regulatory deductions. Despite the slight decrease, the Westpac CET1 ratio is still above the capital regulatory requirement. Westpac’s RWA in 3Q2022 is recorded at $478bn. This is $18bn or 3.9% higher QoQ as compared with its RWA in 2Q2022, which is $459bn. This increase was similarly contributed by the increase in IRRBB RWA which was driven by the regulatory embedded loss from increased market interest rates. The Liquidity Coverage Ratio for Westpac in 3Q2022 was at 130%. This is 7% lower from the previous quarter at 137% but is still comfortably above the regulatory minimum of 100%. This decrease was mainly driven by a second reduction to Westpac’s allocation of the Committed Liquidity Facility (CLF). Lastly, the bank’s leverage ratio is at 5.35%.


Bond Overview

Related Articles

Groupe BPCE 5% 10NC5 Tier 2 SGD

Groupe BPCE recently announced the issuance of its 10NC5 Tier 2 notes at a final price guidance of 5%.

Shawn Sng  |   27 Feb 2024

HSBC – Growth supported by higher rates

In FY202, HSBC growth was supported by higher rates and has reported a growth in its revenue of 30% YoY

Shawn Sng  |   23 Feb 2024

UBS Group 5.75% NC5.5 AT1 SGD

UBS Group recently announced the issuance of its NC5.5 Additional Tier 1 perpetual notes at 5.75%.

Shawn Sng  |   16 Feb 2024


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com