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BNZ five-and-a-half year bonds to pay investors annual interest of 5.536%

Bonds / news
BNZ five-and-a-half year bonds to pay investors annual interest of 5.536%

BNZ is borrowing $600 million through a five-and-a-half year bond issue that will pay investors an annual interest rate of 5.536%.

 The bank will issue the unsecured, unsubordinated fixed rate notes on November 25. To be listed on the NZX Debt Market, they mature on May 25, 2028.

The 5.536% interest rate comes after the margin was set at 1.10% over the reference swap rate. BNZ says the money borrowed will be used for "general business purposes."

By way of a comparison, BNZ's advertised five-year term deposit rate is currently 4.70%.

Announcing the bond issue on November 15, BNZ said it was seeking to borrow up to $100 million, plus unlimited oversubscriptions at its own discretion.

Earlier this month rival ASB borrowed $650 million through a four-year unsecured, unsubordinated, fixed rate medium term note offer that's paying investors 5.928% per annum.

Further details of the BNZ issue are available in the terms sheet here.

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3 Comments

Now what does this mean?

Are they creating more capital for meeting some new capital adequacy requirements??

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This is unsubordinated debt so it won’t count as capital.

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Thanks. so what will be their motivation?

The most popular narrative is that Banks create money for loans (asset purchases) . Why would they be raising money by issuing bonds ?

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