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.
