AMP to raise A$300 mln through Australian and New Zealand bond offer

AMP announced it is looking to raise A$300 million through an issue of unsecured, subordinated notes offered on both the New Zealand Debt Exchange in New Zealand dollars, and on the Australian Securities Exchange in Australian dollars. AMP said it expects its New Zealand notes to have an interest rate of around 8.40% to 8.90% per annum, with the Australian ones to have a rate around 7.5% to 8.00%. The notes will be ten year securities with a five year call option in May 2014. If AMP didn't provide the five year call option, the securities would be required to run to the end of their term and be worth less capital on AMP's balance sheet of Tier 2 capital after the first five years due to Basel II requirements. The notes have been provisionally rated A- by Standard & Poor's and A3 by Moody's. The subordinated bonds rank behind other senior bonds, bank loans and deposits in the event of liquidation. "As previously flagged, we have been evaluating options to raise Tier 2 capital to optimise the efficiency of our capital mix, meet general funding requirements and support the refinancing of subordinated debt," AMP CEO Craig Dunn said. AMP said applications are expected to close on April 2, 2009 or April 7, 2009 if applying through a broker. The minimum investments are NZ$5,000 and A$5,000. "Based on the Australian 90-day Bank Bill Swap Rate at 2 March 2009 of 3.29% and the NZ five year Swap Rate on that date of 4.15% and an indicative range for the margin on the Notes of 4.25% - 4.75%, the A$ AMP Notes are expected to pay interest at a rate of around 7.50% - 8.00% and the NZ$ AMP Notes are expected to pay interest at a rate of around 8.40% - 8.90% per annum," AMP said. UBS Investment Bank and ABN AMRO are acting as Joint Structuring Advisors to the issue. To see a list of retail bond offers in New Zealand see our bond rush page here. For prospective investors wishing to see a prospectus, click on this link.