Judo’s Oversubscribed $150M Notes Highlight Growing Credit Confidence
Judo Bank has successfully priced a $150 million Tier 2 subordinated notes issuance with a significantly tighter margin, reflecting its strengthened credit profile and strong investor demand.
- Issued $150 million Tier 2 subordinated notes with 10-year maturity
- Pricing set at 215 basis points over 3-month BBSW, 120 basis points tighter than last issuance
- Transaction significantly oversubscribed, indicating strong investor appetite
- Settlement scheduled for 8 October 2025
- Capital raise supports Judo’s continued above-market lending growth ambitions
Strong Demand for Judo Bank’s Latest Capital Raise
Judo Bank (ASX, JDO) has priced a new $150 million Tier 2 subordinated notes offering, marking a notable milestone in its capital management strategy. The 10-year notes, with a non-call period of five years, were priced at 215 basis points above the 3-month bank bill swap rate (BBSW). This pricing represents a substantial improvement of 120 basis points compared to the bank’s previous Tier 2 issuance in October 2024.
Reflecting a Strengthened Credit Profile
According to CEO Chris Bayliss, the transaction was significantly oversubscribed, underscoring strong investor confidence in Judo’s creditworthiness and growth prospects. The tighter margin signals that the market views Judo’s financial position as more robust, allowing the bank to raise capital more cost-effectively. This is a positive development for a challenger bank seeking to scale its lending operations while maintaining prudent capital buffers.
Supporting Growth Ambitions Amid Favourable Market Conditions
The fresh capital injection is intended to bolster Judo’s capital structure, enabling it to sustain above-system lending growth as it pushes towards achieving scale. The timing of the issuance also benefits from favourable market conditions, which have helped compress funding costs for banks with improving credit profiles. Settlement of the notes is set for 8 October 2025, after which the bank’s capital position will be further strengthened.
Implications for Investors and the Banking Sector
For investors, the oversubscription and improved pricing highlight Judo’s growing appeal in the fixed income market. For the broader banking sector, Judo’s successful issuance may signal increased investor appetite for subordinated debt from well-positioned challenger banks, potentially influencing funding dynamics across the industry. However, details on the precise impact on leverage ratios and the use of proceeds remain to be clarified.
Bottom Line?
Judo’s improved funding terms underscore its rising credit stature, setting the stage for accelerated growth and closer market scrutiny.
Questions in the middle?
- How will this capital raise affect Judo Bank’s overall leverage and regulatory capital ratios?
- What specific lending growth targets is Judo aiming to achieve with this strengthened capital base?
- Could this successful issuance influence funding costs and capital strategies among other challenger banks?
