Westpac NZ seeks up to NZ$500m

Westpac NZ looks to raise up to NZ$500 mln through floating rate note offer

Bonds

Westpac NZ looks to raise up to NZ$500 mln through floating rate note offer

8th Jul 13, 4:12pm by Gareth Vaughan

Westpac New Zealand is looking to raise up to NZ$500 million through an issue of three-year floating rate notes maturing in August 2016.

The offer opens today and will close at 5pm on Wednesday.

The notes will be senior, unsecured and unsubordinated debt. They will be issued at a margin of between 75 and 80 basis points over the 90 day bank bill rate. Currently the 90 day bank bill rate is 2.65%.

Interest is paid quarterly and each time the rate is reset it will be calculated at the 90 day bank bill rate plus the issue margin.

Pricing will take place on August 8, the same day the notes are to be issued.

Westpac says it's seeking to raise a minimum of NZ$200 million and a maximum of NZ$500 million.

The notes won't be listed on the NZX debt market. Investors must subscribe for a minimum of NZ$10,000 worth, and multiples of NZ$1,000 thereafter.

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8 Comments

by Wolly | 9th Jul 13, 7:39am 1373312340

[ Comment deleted due to irrelevance and low quality, Ed. See coment policy here » ]

by Christov | 9th Jul 13, 1:26pm 1373333207

Um...nevously approaching the keyboard, thinking what wooly might have said.....?

Congratulations Westpac on picking out the new dress, returning to the Libor shuffle dance party looking somehow refreshed and ready to be ogled audit style ...of course.

P.S. ed, careful you don't delete yourself right out of business .....starting to get a bit grey round here.

by Stephen Hulme | 9th Jul 13, 1:43pm 1373334214

It's also getting a bit grey elsewhere - usury maybe at the cusp of extinction. Read more here and here for an analytical backdrop.

Today, something happened that has not happened since the Lehman collapse: the 1 Month Gold Forward Offered (GOFO) rate turned negative, from 0.015% to -0.065%, for the first time in nearly 5 years, or technically since just after the Lehman bankruptcy precipitated AIG bailout in November 2011. And if one looks at the 3 Month GOFO, which also turned shockingly negative overnight from 0.05% to -0.03%, one has to go back all the way to the 1999 Washington Agreement on gold, to find the last time that particular GOFO rate was negative.

It appears to be a theoretical impossibility for the gold and silver market to be in backwardation for any extended period of time. Such a situation would guarantee unlimited and riskless profits for all those holding gold and silver. They could replace their cash holdings with futures at a lower price. When their futures contract matured, they could take delivery and repeat the procedure.

Hence who will accept the promise of irredeemable fiat currency - only the ill-informed?

by Christov | 9th Jul 13, 1:44pm 1373334263

Cheers Stephen H.....now that is completely worthy of note..! gees man they ought to pay you for keeping me informed.

by Stephen Hulme | 9th Jul 13, 1:47pm 1373334475

Thanks Christov

The link to the original ZH article is here - cutoff times for editing are being shortened.

by JT | 9th Jul 13, 12:02pm 1373328124

Is it possible to find out what they need to raise $500 mln for?

by Stephen Hulme | 9th Jul 13, 1:20pm 1373332831

Not easily - but they bet the RBNZ will back stop the cost of short term capital (OCR) at or below risk adjusted rates. So it is a secure bet they will replace higher cost, but fairly priced foreign wholesale borrowings with this cheap (read subsidised) locally sourced funding.

And as Craig Simpson noted elsewhere there are maturing fixed interest investments looking for a home.

One of the issues facing NZ investors is reinvestment of approximately NZ$525 million worth of bonds that mature this month. I wrote about this issue recently and with a reasonable level of uncertainty in markets I am guessing a good portion of this money will end up in bank term deposits, as opposed to being reinvested into other fixed income securities. Investors requiring income will be struggling to find anything available that is comparable either on interest rate or possibly credit quality.

by LloydM1 | 9th Jul 13, 12:25pm 1373329559

Good to see the mods working this site how, although I am sure wollys comment would have been blunt, but on the money (debt).

More debt, more debt, faster and faster it goes. Its a certainty the OBR will come into play, the only question is when!