Auckland Council seeks up to NZ$175 mln through 6-year, fixed-rate secured bond offer

Auckland Council is seeking up to NZ$175 million through a six-year, fixed-rate, secured retail bond offer.

The bond offer is the first retail offer from Auckland Council since the "Super City" was created in November 2010. The offer opens today and will close on Friday.

The interest rate will be set on Friday and will be the aggregate of the applicable six-year swap rate at that time (about 3.25% today) plus a margin of 1.08% per annum. The amount of money being sought includes up to NZ$50 million in oversubscriptions.

“Our first retail bond offer provides ratepayers and other retail investors the opportunity to invest alongside institutional investors and banks in Auckland’s growth and see tangible outcomes from their investment. Auckland Council is one of the best credit rated entities in the country,” says Auckland Council's chief finance officer, Andrew McKenzie.

“The offer is an effective and efficient way to raise debt to fund infrastructure investment. When managed well, debt is a sensible way to fund our new capital projects and achieve the goal of making Auckland the world’s most liveable city,” says McKenzie.

The bonds, which will mature on October 16, 2018, carry a AA credit rating from Standard & Poor's and an Aa2 one from Moody’s.

The bonds are secured by a charge over the rates revenue of Auckland Council and will rank equally with all other secured debt of Auckland Council. The security is first ranking except to the extent that other security is preferred by law, including security interests that may have priority under the Personal Property Securities Act. Application has been made to NZX to list the bonds on the NZX debt market.

The minimum investment level is NZ$5,000, with multiples of NZ$1,000 thereafter.

Projects funded by the borrowing will include improved public transport, sports fields, new libraries and community facilities, Auckland Council says.

ANZ and BNZ are lead managers.