BNZ raised US$750 million through the sale of three year, government guaranteed bonds placed with US institutions. This is the third long term issue of guaranteed debt by a New Zealand bank since the government's wholesale guarantee scheme was announced in November, and the first by BNZ. The issue was priced at 70 basis points (bps) above three-year US swap rates, Reuters said. Adding on the 70 bps fee for an issue under the NZ wholesale guarantee, and other costs of about 20 bps, the issue will be costing the BNZ around 160 bps above swaps. This pricing compares to the 80/85 bps over three year swaps paid by Westpac when it announced a three year US$1.5 billion issue just over a week ago (or 170 bps after fees), and the 250 bps (including fees) above swaps paid by ANZ when it made its three year US$1 billion issue, the first issue under the wholesale guarantee, late in March. The price of the latest issue is further evidence that the costs of foreign funding have been easing lately.
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