By Gareth Vaughan
Rabobank New Zealand, which according to KPMG accounted for 65% of the country's new rural lending last year, has issued NZ$100 million worth of seven-year bonds to retail investors in a further boost to its funding.
The unlisted bonds will pay an interest rate of 6.25%. The majority of the bonds have been distributed to NZX member advised, private banking and independent financial advisor clients.
The issue is rated Aaa with a negative outlook by Moody’s Investors Service and AAA, also with a negative outlook, by Standard & Poor’s. Westpac Institutional Bank and Bank of New Zealand were joint lead managers. The bond matures on May 16, 2018 and interest will be paid twice a year, May 16 and November 16 with the first payment on November 16 this year.
Investors were asked to stump up a minimum of NZ$10,000 with multiples of NZ$1,000 thereafter.
The retail issue follows Rabobank raising NZ$250 million from a seven-year floating rate note issue to institutional investors last month.
Patrick Mitchell, Rabobank's head of long-term funding for the Asia/Pacific, said the latest offer was structured to appeal to retail investors with a minimum interest rate set at the outset to give investors certainty of yield over the offer period.
“Soon after the wholesale floating rate note was issued we received reverse enquiry from the market reflecting demand for a retail fixed rate transaction and structured the transaction to give certainty of yield to investors," Mitchell said. "Had we not done this the yield would have yielded around 6.15% and may not have been so appealing."
The interest rate was set yesterday at 6.25% which was the set minimum rate. It was chosen because the alternative of the swap rate plus 1.30% came to about 6.15%. The deal settles on May 16.
KPMG's annual Financial Institutions Performance Survey, released last week, noted that Rabobank had accounted for nearly 65% of new lending to the agricultural sector during 2010.
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