ANZ share price best of bad bunch after pocketing extra $2.3b

A parent's hands cup a child's as they hold a small jar of money.A parent's hands cup a child's as they hold a small jar of money.

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price was rangebound today. ANZ shares closed trade 44 basis points down at $22.71.

The bank raised $2.3 billion of debt capital on Wednesday following sharp demand for its bond issue that was completed today.

In broad market moves, the S&P/ASX 200 Financials Index (ASX: XFJ) softened today, 0.88% in the red at market close.

ANZ raises $2.3 billion for Suncorp deal

The bank issued the subordinated bonds at a fixed coupon rate (interest rate) of 5.986% until maturity, according to Refinitiv Eikon data.

ANZ has been on the road with its pitchbook in an effort to sure up additional capital. It follows the bank’s $4.9 billion purchase of Suncorp Bank.

It had issued $3.5 billion of equity via an equity raise to pay for the transaction, and completed another bond issue last week for $2.8 billion.

That offer was at a higher interest rate – 6.32% to be exact. More to the point, it adds to a large cash injection the company has secured over the past few months.

After the $4.9 billion capital expense, ANZ’s balance sheet would have seen a large outflow of cash.

Consequently, this would have adjusted its capital adequacy ratios (CET1 and CET2 ratios).

Banks are required to keep a certain amount of capital on the balance sheet relative to their liabilities. It’s synonymous to the bank’s reserves.

These are known as capital adequacy ratios and place a layer of resiliency over the sector.

With that in mind, ANZ needed to acquire the additional capital in order to bring its CET1/CET2 ratios back in line with the required 4%/8% respectively.

ANZ share price snapshot

In the last 12 months, the ANZ share price has slipped more than 18% into the red. ANZ shares have lost 16.8% since the start of 2022.

The post ANZ share price best of bad bunch after pocketing extra $2.3b appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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