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Rates round-up: November 12

Kiwibank confirms bond offer; Hubbard investors feud with manager; big demand for government bonds

Monday, November 12th 2012, 7:42AM

by Niko Kloeten

State-owned Kiwibank has confirmed an offer of up to $150 million of unsecured, Subordinated Bonds to the New Zealand public.

The bank intends to treat the bonds as 'tier 2' capital instruments under the Reserve Bank’s Basel III framework and it will use the proceeds to provide it with additional capital to meet its growth aspirations.

The bonds have a maturity date of December 15 2022 but may be called by Kiwibank from December 15 2017, and earlier in certain circumstances.

They are expected to have a credit rating of BB+ from Standard & Poor’s and will pay interest semi-annually.

The interest rate for the first five years and margin will be set and announced to the market this Tuesday following a bookbuild.  The offer is expected to open this Wednesday.

Kiwibank’s credit ratings was recently downgraded one notch by Standard & Poor’s from AA- to A+

Hubbard investors feud with manager

A war of words has broken out between investors in the late Allan Hubbard’s Aorangi Securities and the fund’s statutory managers, accounting firm Grant Thornton.

An investor liaison group recently laid an official complaint against Grant Thornton, blaming it for delays in payouts to investors, a number of whom have died since the firm went into statutory management.

But Grant Thornton has hit back, placing the blame for the delays on Hubbard’s widow Jean, who is contesting ownership of $60 million of assets in a court case that has been delayed until next year.

"It is this action that is causing the significant delay, including having to find every relevant document on record."

They defended their call to delay the hearing while they sift through 70 recently-discovered boxes of documents, saying it would improve their chance of success in court.

"The unofficial Investor Liaison Group has failed to understand the situation with Aorangi Securities despite many meetings with them to answer their questions."

Big demand for government bonds

As international markets digested Barack Obama’s re-election as President of the United States, investors flocked to New Zealand government bonds.

The New Zealand Debt Management Office’s latest auction of government bonds was held last Thursday, the day after the US election.

The offer of $100 million of New Zealand government bonds maturing in 2019 received $270 million of bids with an average weighted successful yield of 3.05%.

Meanwhile, $150 million of 2023 bonds were even more heavily oversubscribed, attracting $559 million of bids for a bid cover ratio of 3.6 and a weighted average successful yield of 3.52%.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« Rates round-up: October 23Rates round-up: November 19 »

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