By Craig Simpson

As reported previously, BNZ is launching a fresh senior bond issue. The bonds offered are unsecured and unsubordinated securities.

BNZ is seeking to raise up to NZ$350 million across two tranches.

Tranche 1:  5-year fixed rate bonds, with an indicative margin of 1.23% - 1.28% over the 5-year swap. The final rate will be set on March 22 with Interest payable half yearly.

If set today at a margin of 1.25% over the 5-year swap rate the coupon would be approximately 4.68% p.a.

Tranche 2. 5-year floating rate note, with an indicative margin of 1.23% – 1.28% over the 90 day Bank Bill rate. Interest rate reset quarterly, with interest payable quarterly.

If set today at a margin of 1.25% over the 90-day bank Bill rate the coupon would be approximately 3.87% until the first reset.

Both bonds mature on 28/03/2018 and they are rated AA- by Standard & Poor’s.

The bonds will not be listed on the NZDX market but they are tradable over the counter via the likes of sharebrokers and bank investment divisions.

Based on other debt securities already on issue with a 2018 maturity and similar credit rating the prospective coupon is in line with the market.

To compare the prospective yield on these securities against those already on issue please refer to our bond indicative pricing page here.