Westpac New Zealand said it had raised $800 million through a
five-year bond offer - the biggest ever domestic issue of its
type from any New Zealand bank.
The issue, which was originally aimed at raising $100m to
$500m, is equal to what was then the biggest domestic issue
from a non-government entity - Fonterra - in 2009.
Westpac's offer of senior, unsecured and unsubordinated bonds
had to be scaled back, with about $820 million in bids coming
forward, treasurer Jim Reardon said.
The offer opened last Friday and closed today (Thursday). The
final rate will bet set tomorrow (Friday). The issue was
priced at 103 basis points over the equivalent swap rate.
Based on today's market, the bonds would yield 5.53 per cent.
About one third of the offer was taken up by private
investors through their KiwiSaver funds or through their
financial advisers, with the rest taken up by wholesale
Reardon said the bank was not sure how investor confidence
would be affected by the uncertainty surrounding Syria, but
that it did not turn out to be factor.
"It showed the way that the bond market in New Zealand is
growing and the increased impact of the KiwiSaver funds,"
Reardon told APNZ.
"The other aspect is that New Zealanders in general over the
last few years have become better savers and fixed income
from quality issuers is seen as a good, safe bet," he said.
Westpac's move coincides with signs of life in domestic and
overseas bond markets over the last six months.
Yields have risen, partly reflecting expectations that the
world's major western economies would soon start to wind back
artificially soft monetary conditions.
"I don't doubt for a minute that the fact that the yield
curve has moved quite substantially over the last six months
may have played a part in the issue's success," Reardon said.
"If we were trying to do the same sort of deal with base
yields one or two percent lower -- as we saw last year, then
we would not have seen the same demand," he said.
Christian Hawkesy, head of fixed income at Harbour Asset
Management, said the issue had been well received.
"From Westpac's point of view, it gives them access to
funding from a relatively narrow credit spread," he said.
Bond yields world wide have risen sharply in recent months.
Benchmark US 10-year bond yields were at 1.6 per cent in May
are now pushing 3 per cent, which is a big jump in bond
"The fact that yields have risen over the last two or three
months has brought some investors out of the woodwork,"