Herbert Smith Freehills is pleased to be advising Commonwealth Bank of Australia (CBA) on its offer of CommBank PERLS XVI Capital Notes to raise approximately A$1.55 billion (with the ability to raise more or less) (Offer). 

The Offer was announced on 16 May 2023 and is CBA’s sixteenth retail hybrid offering. The Offer is the first retail offering of Tier 1 Capital in Australia since the write down of Credit Suisse’s Tier 1 hybrid instruments in March 2023.

CBA is one of the leading providers of financial services in Australia, providing retail and commercial banking services predominantly in Australia, and in New Zealand through its subsidiary ASB.

CommBank PERLS XVI Capital Notes are subordinated, unsecured notes. The proceeds from the issue will raise Tier 1 Capital to satisfy CBA’s regulatory capital requirements and maintain the diversity of CBA’s sources and types of funding. The net proceeds of the Offer will be used to fund CBA’s business. The Offer was made in compliance with the recently introduced Product Design and Distribution Obligations (PDDO) regime.

Herbert Smith Freehills’ capital markets team was led by partners Philippa Stone, Patrick Lowden and Fiona Smedley, and supported by senior associate Charlotte Cameron, solicitor David Tilley, and graduates Rainer Gaunt and Sarah MacDonald.

Herbert Smith Freehills has worked closely with CBA, including Group General Counsel and Group Executive Legal & Group Secretariat Carmel Mulhern, EGM General Counsel Treasury, Corporate and Technology Mark Alexander, and General Manager Corporate and Treasury Legal Kirsty Cox, and with the CBA Legal and Treasury team.

Ms Stone said, “We are delighted to be acting for our valued client, Commonwealth Bank of Australia, on its issue of CommBank PERLS XVI Capital Notes. We are proud of our work with the CBA team on various PERLS transactions over the years, and it was an absolute pleasure to work with the CBA team again.”

The arranger for the Offer is Commonwealth Bank of Australia (Capital Markets Division) (CBA Markets). The joint lead managers are CBA Markets, ANZ Securities Limited, Bell Potter Securities Limited, Morgans Financial Limited, Morgan Stanley Australia Securities Limited, National Australia Bank Limited, Ord Minnett Limited, Shaw and Partners Limited, UBS AG Australia Branch, and Westpac Institutional Bank, a division of Westpac Banking Corporation.

The arranger and joint lead managers were advised by Allens.

This transaction is another example of Herbert Smith Freehills’ market-leading capital markets work, and follows recent roles on a number of significant bank hybrid transactions. The firm has recently acted for the arranger and joint lead managers of Challenger Group’s A$350 million offer of Capital Notes 4, ANZ’s A$1.5 billion offer of Capital Notes 8, Macquarie Group Limited’s A$750 million offer of Capital Notes 6, and Westpac Banking Corporation’s A$1.5 billion offer of Capital Notes 9, as well as for CBA on the previous PERLS XIV and PERLS XV transactions, all of which were also made under the PDDO regime.