BNZ's new $3 billion bond programme is positive for the bank and the country's banking system as it widens the wholesale funding available, credit rating agency Moody's said.The covered bonds, backed by the bank's mortgages, have been given a long-term AA
BNZ's new $3 billion bond programme is positive for the bank and the country's banking system as it widens the wholesale funding available, credit rating agency Moody's said.
The covered bonds, backed by the bank's mortgages, have been given a long-term AAA credit rating by Moody's.
The programmed accounted for about 11% of wholesale funding, or 5% of total funding.
"This would place BNZ in a sweet spot from a credit perspective because it establishes a new debt product, allows for more issuance in future, and if the size is small enough, would not trigger negative credit implications," said Moody's Sydney-based assistant vice-president Marina Ip.
BNZ, one of New Zealand's top four banks, raises around 40% of its funding on the wholesale market, and would benefit from increasing its options, she said.
The Reserve Bank of New Zealand's recent classification of covered bonds as primary liquid assets makes them an attractive instrument for banks to issue and hold.
Sign up to get the latest stories and insights delivered to your inbox – free, every day.
