Bank of New Zealand has raised NZ$200 million through a seven-year senior bond issue to institutional and habitual investors, who will receive interest of 5.57% per annum.
The issue, which opened on Monday, was priced today at a margin of 2.15% over the seven-year swap rate. The offer sought to raise a minimum of NZ$50 million and was capped at NZ$200 million.
The BNZ bond issue comes with the bank calling a NZ$350 million issue of subordinated bonds today. Issued in the high interest rate environment of 2007, those bonds paid 8.42% per annum and BNZ could have reset the interest rate for another five years at 75 basis points over the five-year swap rate. Based on today's five-year swap rate of 3.09%, it would've been reset at just 3.84%. (See today's statement from BNZ on the bonds being called here).
The new bonds were sold to institutional and habitual investors but are retailable, meaning they will be available to retail investors through the secondary market.
BNZ also raised NZ$200 million in a seven-year bond issue in December, which was priced at 2% over swap and is paying investors 6.1%. And in March ANZ and Rabobank raised NZ$250 million each in seven- year bond issues. ANZ's issue is paying annual interest of 6.25%. This was used as a minimum rate and was higher than the alternative option of the aggregate of the seven-year swap rate plus a margin of 2.10% at the time the rate was set. Rabobank's issue was also priced at its minimum rate of 6.10%, given this was higher than the alternative of the seven-year swap rate plus 1.90%.
(Update adds link to BNZ statement on bonds being called).
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Elsewhere, another NZ$100 mln raised today - 'MTF $100 million medium term note issue fully subscribed'
Motor Trade Finances Limited (MTF) has today issued $100m of medium term notes to institutional investors, in only the second non-mortgage backed security issue in New Zealand dollars, since the global financial crisis.
Standard & Poor's Ratings Services today assigned structured finance ratings to two classes of note, with Class A Notes rated AAA (sf) and Class B Notes rated AA (sf). The notes will be issued by Trustees Executors Ltd, on behalf of the MTF Zephyr Trust 2012.
The notes are backed by motor vehicle receivables originated by MTF dealers and franchises, who are all MTF shareholders.
The $100m issue consists of $87.7m of AAA (sf) notes, $2.8m of AA (sf) notes, with the balance of $9.5m of unrated notes held by MTF. The notes will be fully subscribed, on issue.
Very little securitisation activity has appeared in New Zealand, post the global financial crisis, with only three issues coming to market in recent years.
Commonwealth Bank of Australia and Westpac New Zealand acted as joint arrangers and lead managers, assisting MTF to organise and place the notes with investors.
The ratings assigned to the notes reflect the credit and liquidity support provided by MTF, and the track record and industry experience of MTF and its shareholders. The notes have an aggregate expected term of up to four years and provide MTF with competitive, longer term funding.
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