BNZ is borrowing $550 million at 3.648% per annum through a five-year bond issue.
The bank's issue of unsecured, unsubordinated fixed rate medium term notes was priced at a margin of 1.04% over swap on Wednesday. The bonds are being packaged in retail investor friendly minimum denominations of $5,000, and are expected to be quoted on the NZX Debt Market.
The offer sought $100 million with BNZ additionally giving itself the option of accepting unlimited oversubscriptions. The bonds are due to mature on November 16, 2023. BNZ's terms sheet is here.
Separately Chorus has unveiled plans for an offer of 10 year unsecured, unsubordinated, re-setting fixed rate bonds to both retail and institutional investors. It's seeking $300 million plus oversubscriptions, and will pay an interest rate for the first five years of no less than than 4.35% per annum.
As interest.co.nz reported last week, whilst there's been much gnashing of teeth over the dearth of initial public offerings on the share market this year, there's been no shortage of corporate bond issues. More than $2.415 billion has been borrowed by 20 wide ranging corporate issuers - excluding banks - at what are low interest rates by historic standards.
9 Comments
Do the bonds have a higher security ranking than retail depositors under OBR rules? If so, that may justify the gap. BUT, in any case, as the name 'unsecured' suggests, nothing comes even close to a covered bond security. To be honest, if you actually look at the security of lending a bank your money, you wouldn't really give them anything unless a covered bond holder...
thats true in an up interest market but the reverse at the moment, i had a lot of bonds at 7% straight after the GFC and they satyed that way for a good five years while interest rates tanked, maybe interest rates will rise but if they do it will be a slow climb as the debt mountain is too BIG
Chris T, this should answer your OBR related questions - https://www.interest.co.nz/bonds/64411/if-bank-failed-and-open-bank-resolution-policy-was-implemented-how-would-it-affect-bank
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.