ANZ resets interest rate on NZ$835 mln bond issue at 5.28% for 5-years, well down on 9.66% they've paid since 2008

ANZ has reset the interest rate on an NZ$835 million perpetual callable subordinated bond issue it, perhaps surprisingly, decided not to call in February at 5.28% for the next five years. That's well down on the 9.66% the rate has been since the bonds were issued in 2008.

The new interest rate runs from April 18 this year until April 18, 2018. It's the equivalent of the five-year swap rate, as of April 16, plus a margin of 2% per annum. When it issued the bonds in 2008 ANZ said 75% by value went to retail investors, and that it had raised more than double its initial forecast.

In February ANZ announced that it didn't intend to exercise its right to repay the NZ$835 million bond issue on April 18. In Australia this decision was described as the first time one of the major banks had decided not to call a perpetual hybrid security when expected.

In contrast rival BNZ announced in February it was calling and repaying a NZ$450 million perpetual non-cumulative share issue, which also dated from 2008 and had been paying investors 9.89%. Subsequently BNZ issued NZ$350 million worth of bonds, with about half taken by retail investors, in an offer split into fixed and floating interest rate tranches. BNZ raised NZ$100 million through the fixed interest rate tranche of the offer, with these bonds paying 4.68%, being a 121 basis points margin over the five-year swap rate. The floating rate tranche was priced at 121 basis points over the 90 day Bank Bill rate, and will be reset quarterly.

The ANZ bonds are listed on the NZX debt market.