ANZ Bank New Zealand wants at least $100m in five-year bond offer

(Photo: Jerry Yelich-O'Connor)

ANZ Bank New Zealand wants to raise at least $100 million by selling five-year bonds, which will have a lower interest rate than what it's offering term depositors.

The Auckland-based unit of Australia & New Zealand Banking Group has today opened an offer to sell unsecured, unsubordinated fixed rate bonds maturing on September. 1, 2022, with the capacity for unlimited oversubscriptions, it said in a statement.

The bonds have an indicative margin above the five-year swap rate of 1.05-1.1%, which at today's rate of 2.63% would see the bank pay annual interest of between 3.68% and 3.73%. That's still cheaper than raising funds from retail deposits, with ANZ currently offering an annual rate of 4.3% on a five-year term, according to the interest.co.nz website.

Banks have been complaining about their shrinking margins as growing turbulence in financial markets and the prospect of major central banks withdrawing the extraordinary stimulus of the past decade have pushed up international interest rates, making wholesale funding from overseas more expensive for lenders.

ANZ Bank New Zealand's interest costs ran up to $2.35 billion in the nine months ended June 30 on deposits and other borrowings of $102.09 billion at the balance date. That compares to a $2.59 billion interest expense on borrowings of some $99.94 billion a year earlier. Through the same period, interest income shrank to $4.62 billion on net loans totalling $116.45 billion from interest income of $4.84 billion on net advances of $114.62 billion.

The final interest rate will be set in a bookbuild on Friday, which is also when the bond offer closes. ANZ intends to offer the bonds to the New Zealand public and certain institutional investors, although there won't be a public pool.

The bonds are expected to be listed on the NZX's debt market, where the bank has eight other instruments listed.

(BusinessDesk)


7 · Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

7 Comments & Questions

Commenter icon key: Subscriber Verified

For that interest rate, they can shove it.

Reply
Share
  • 0
  • 0

Security being the same - ie, investor has none with these banks (and is not compensated for that risk with these stimulunatic low rates) - why would anyone take these 5 years bonds returning less than a 5-year term deposit?

Not spoken to in the article: what am I missing?

Reply
Share
  • 1
  • 0

Hi Mark, In buying the bond today (over the 5 year TD), you would be taking a position the either; a. you believe market interest rates will move yet lower giving you a capital gain if you then sold prior to maturity (try doing that with a TD) or, b. rather than seek a return, you might be using the bond in a diversified portfolio to temper overall volatility from equities until you then wanted to switch that allocation back to higher risk/reward at some point when you consider the dust has cleared, again a bond enables you to tweak your allocation and a TD doesn't. In the end every investor has different needs/objectives, more to it than just the headline rate.

Reply
Share
  • 0
  • 0

The other thing to consider when determining whether the rate is attractive or not is whether the auction clears or not...I'm guessing it will!

Reply
Share
  • 0
  • 0

The super funds will pick it up, and I'll be looking to see who they are. Then check my kiwisaver, to ensure I'm not exposed the poor returns for the risk one is taking on with the banksters.

Reply
Share
  • 0
  • 0

Just goes to show the how new constraints are impacting on the Banks to get their borrowings off-shore

Reply
Share
  • 0
  • 0

Very cheeky yield considering that investors are exposed to the potential risk from the Reserve Bank's open bank resolution and could get a haircut in a GFC MK2. I suspect investors are unaware of this risk and see these as being very safe.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7333 0.0000 0.00%
AUD 0.9160 0.0013 0.14%
EUR 0.6176 -0.0001 -0.02%
GBP 0.5439 0.0002 0.04%
HKD 5.7225 0.0036 0.06%
JPY 82.4590 -0.0760 -0.09%

Commods

Commodity Price Change Time
Gold Index 1301.0 -9.900 2017-09-20T00:
Oil Brent 56.3 1.090 2017-09-20T00:
Oil Nymex 50.7 1.150 2017-09-20T00:
Silver Index 17.3 0.055 2017-09-20T00:

Indices

Symbol Open High Last %
NZX 50 7851.1 7851.1 7819.2 -0.42%
NASDAQ 6459.7 6466.1 6461.3 -0.08%
DAX 12550.9 12593.2 12561.8 0.06%
DJI 22351.4 22413.3 22370.8 0.19%
FTSE 7275.2 7289.9 7275.2 -0.05%
HKSE 28091.2 28184.4 28127.8 0.10%
NI225 20456.5 20481.3 20310.5 0.45%
ASX 5709.1 5709.1 5709.1 -0.88%