Westpac is aiming to raise up to NZ$400 million through the issue of five-year bonds paying a fixed 5.9% 5.8% interest rate per annum, of which 5.4% 5.3% goes to the investor and 0.50% is donated to the Christchurch Earthquake Appeal Trust. (Corrected after Westpac issued corrected statement).
The "Red & Black Bond" gives investors the chance to support Christchurch's recovery, Westpac says, after the spate of earthquakes in the city since last September. Investors will donate a fixed portion of the interest earned on each bond to help rebuild community projects such as sports and cultural facilities and community halls.
The Red & Black Bond offer will be open for three weeks from Thursday July 21. The bonds will be unsecured, unsubordinated debt securities issued by Westpac New Zealand Limited. The minimum amount the offer will raise is NZ$50 million and the maximum issue size is NZ$400 million.
“The Red & Black Bond provides a win-win situation. The investor receives a competitive fixed rate return on the bonds and is able to share some of that benefit with Kiwis who really need it,” said David McLean, CEO of Westpac Institutional Bank.
“The resilience and determination of those in Christchurch has been extraordinary and investors will know they are directly helping communities re-establish themselves.”
McLean said none of the Red & Black Bond donations will be used to cover operational or administrative costs. The Christchurch Earthquake Appeal Trust will choose which community projects receive assistance.
Other firms have helped Westpac with the Red & Black Bond and are donating their brokerage fees. These include UBS, First New Zealand Capital, Forsyth Barr, Macquarie and NZX. McLean said Chapman Tripp, Link Market Services and Colenso BBDO had also donated their time and resources.
Interest on the bonds will be paid twice yearly in arrears. The minimum investment is NZ$5,000. Westpac says normal withholding taxes will be deducted on the interest paid to investors but not on the portion donated to the Christchurch Earthquake Appeal Trust.
Westpac wants to have the bonds listed on the NZX debt market.
(Update adds maximum size of issue of NZ$400 million, Official correction to rate to 5.8% from 5.9%).
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