What happened Friday

A review of things you need to know before you go home on Friday; commission surge, poll surge, Chronican's third bank, China sentiment improves, bankruptcies up, swaps down

22nd Jul 16, 4:02pm by David Chaston

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
No changes to report today.

TODAY'S DEPOSIT RATE CHANGES
No rate changes here either.

BIG BUCKS
Our review of real estate industry commissions out today shows that this sales industry earned almost $500 mln in gross commissions from the residential market in the three months to June.

MORE POPULAR
The latest political poll has surprised many with the National Party support surging in July.

BNZ BOARD CHANGES
Two non-executive directors - Michaela Healey and Gavin Slater - have left the BNZ board. And Phil Chronican, currently a non-executive director on the National Australia Bank board, has been appointed to the BNZ Board as a NAB-appointed non-executive director, subject to RBNZ approval. Until April this year Chronican headed ANZ's Australian division (and prior to that he was Westpac Group's CFO).

LOOKING UP IN CHINA
Sentiment among executives at China’s largest companies picked up in July as gains in new orders, output and credit availability drove confidence higher, according to the latest edition of the MNI China Business Sentiment Survey.

A LITTLE WARNING SIGNAL
The latest personal bankruptcy data out today suggests this sort of credit stress is rising. It had fallen to pre-GFC levels, but individual bankruptcy data for the month of June (370) was the highest its been since November 2012.

MORE JUNK COMING
Westpac signaled that it will likely issue a tier two bond offer, a Co-Co bond that carries high risks for investors because it will convert to capital rather than be repaid if Westpac ever gets financially stressed. The offer signaled will be for "unsecured, subordinated, fixed rate notes" for a term of 10 years. There was no indication today on how much they will be seeking.

ALMOST FULL
Auckland Council closed its retail bond offer today. It sought $100 mln with the option to take $100 mln in over-subscriptions. In the end it raised $180 mln. The interest rate for these bonds has been set at 3.338%, reflecting a margin of 0.90% over the effective swap rate for the 10 year period.

SWAP RATES FALL AGAIN
Wholesale rates fell and flattened today. Remember these are already at record low levels so today's move down pushes that further. Rates fell -2 bps to five years, and -5 bps for 10 years. That flattened the rate curves further. NZ swap rates are here. The 90-day bank bill rate pipped up +1 bp to 2.31%.

NZ DOLLAR UNCHANGED
The NZD is currently at 69.9 USc, 93.5 AUc, and 63.4 euro cents. The TWI-5 is still at 73.9. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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5 Comments

by Stephen Hulme | 22nd Jul 16, 6:27pm 1469168822

Westpac signaled today that it will likely issue a tier two bond offer, a Co-Co bond that carries high risks for investors because it will convert to capital rather than be repaid if Westpac ever gets financially stressed. The offer signaled will be for "unsecured, subordinated, fixed rate notes" for a term of 10 years. There was no indication today on how much they will be seeking.

Hmmmm, the cost of replacing parent bank capital APRA demanded had less risk upon it's return to Australia. Kiwis would be better off chucking the Aussie bank owners out since we are now exposed to socialising their losses without taking a share of the profits.The RBNZ's ill founded OBR scheme has far reaching, but as yet not publicly discussed, consequences for investors buying into domestic unsecured bank liabilities.

by Tom Joad | 22nd Jul 16, 6:26pm 1469168798

Co-Co's are an accident waiting to happen in the present environment. Almost as risky as shares without the upside potential. Ask the owners of Deutsche Bank 6% Co-Cos how they're feeling.

by Stephen Hulme | 22nd Jul 16, 6:42pm 1469169759

Yes,indeed. Which NZ cohort of greater fools are Westpac's unscrupulous underwriters targeting?

by sharetrader | 22nd Jul 16, 6:18pm 1469168302

banks not waiting and already pulling finance, smells a lot like 2008 and the credit squeeze,
Today Sovereign, Co-Op and BNZ withdrew pre-approvals for some customers and Sovereign now saying that if you leveraging, they take the new 60% rule across ALL their security.
BNZ withdrew one (at 70% now 60%) that was settling Monday

by PocketAces | 22nd Jul 16, 6:44pm 1469169860

Oh well, looks like Chinese Banks are about to pick up where the Aussie ones leave off. Expect the public purse to be paying many times more accommodation top up money to foreign landlords very soon. Everyone should rail against that.