Bendigo and Adelaide Bank will redeem its A$125 million subordinated floating rate notes nearly five years ahead of maturity, with APRA approval secured for the early redemption.
- A$125 million subordinated notes to be redeemed on 14 October 2026
- Redemption approved by Australian Prudential Regulation Authority
- Noteholders to receive face value plus final interest payment
- Redemption does not signal future early redemptions of other capital instruments
- Payments to noteholders based on record date 6 October 2026
Early Redemption of Subordinated Notes Confirmed
Bendigo and Adelaide Bank (ASX:BEN) has confirmed it will redeem all of its A$125 million subordinated floating rate notes on 14 October 2026, nearly five years before their scheduled maturity in October 2031. This move follows the terms set out in the bank’s debt instrument programme and comes with the necessary approval from the Australian Prudential Regulation Authority (APRA).
The notes, issued with a face value of $10,000 each, will be repaid at par along with the final interest payment to noteholders who hold the securities as of the record date on 6 October 2026. The bank will notify the market and investors formally through a redemption notice published in The Australian newspaper.
Capital Management and Regulatory Oversight
While the redemption reduces Bendigo Bank’s subordinated debt outstanding, the bank was careful to clarify that this action does not indicate any intention to redeem other regulatory capital instruments early. Any future redemptions of similar instruments would require separate APRA approval, which is not guaranteed.
This cautious stance aligns with Bendigo Bank’s recent capital management strategy, which has seen a slight increase in its Common Equity Tier 1 ratio to 11.38% amid loan portfolio growth and operational risk overlays. The redemption may help streamline the bank’s capital structure without disrupting its regulatory capital ratios.
Implications for Investors and Market Watchers
For investors holding the subordinated notes, the early redemption offers a clear return of principal plus accrued interest, eliminating exposure to the notes’ floating rate payments beyond October 2026. This could prompt reinvestment decisions, depending on market conditions and available yields on alternative fixed income products.
From a broader perspective, Bendigo Bank’s move to redeem these notes ahead of maturity may reflect prevailing market conditions or strategic capital optimisation, but without explicit guidance on future redemptions, shareholders and bondholders should monitor any further announcements closely.
Bottom Line?
The early redemption of A$125 million subordinated notes signals a tactical capital adjustment but leaves future capital moves uncertain and subject to APRA’s green light.
Questions in the middle?
- Will Bendigo Bank pursue early redemption of other regulatory capital instruments?
- How will this redemption impact Bendigo Bank’s capital ratios in the coming quarters?
- What reinvestment options will noteholders consider following the early redemption?