The New Zealand branch of Rabobank Nederland has issued NZ$250 million worth of seven-year floating rate notes to institutional buyers.
The notes will pay interest at 145 basis points over three month bank bills. The notes will settle on April 20 and are set to mature in April 2018. Rabobank has a AAA credit rating with a negative outlook from international credit rating agency Standard & Poor's and Aaa with a negative outlook from Moody's Investors Service. Westpac Institutional Bank is sole-lead manager of the Rabobank issue.
Institutional investors typically hold floating rate notes as a an alternative to short-term securities or cash, usually in the expectation that short term rates will rise over the life of the issue. Investors must stump up for a minimum of NZ$10,000 worth of the notes, with multiples of NZ$1,000 thereafter.
Rural lender Rabobank New Zealand recently revealed a more than eight-fold rise in annual profit after a big drop in provisions for bad loans, but still lost out on interest payments worth nearly NZ$34 million due to impaired assets.
Rabobank's 2010 profit after income tax of NZ$71.9 million was up from just NZ$8.5 million in 2009. The turnaround came as the bank released a NZ$9.6 million provision for risk compared with a NZ$17.6 million charge in 2009. Its impairment losses on loans tumbled 57% to NZ$34.7 million from NZ$80.9 million.
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