The company’s Australian team has just finished making a high-yield fund which is backed by collatorised debt obligations (CDO) for ABN Amro Craigs in New Zealand.
It says the product has been launched in New Zealand, as opposed to Australia, as Kiwi investors are far more sophisticated when it comes to understanding fixed interest investments.
The HY-FIs offering is a New Zealand dollar denominated, fixed interest security which has two series offering different returns. Series one is offering 7% annually and series two has its rate set at 8.75%.
Series one, which aims to raise $40 million, is rated AA- by Standard and Poor’s, will the $30 million series two has a BBB rating.
The offer is backed by a synthetic CDO which is made up of investments in 70 leading international companies. ABN Amro will own the unrated, or equity portion of the CDO, meaning it will suffer the first losses if there are any.
The next two tranches are series 2 and series 1, and the remaining AAA portion of the $1.6 billion CDO will be retained by ABN Amro.
“The decision to introduce HY-FIs into this market has been shaped by demand from our client base,” ABN Amro Craigs chairman Neil Craig says.
Frank Jasper, who managers the company’s asset management division, says there is a need for alternative fixed interest investments in New Zealand as credit spreads are tight, compared to overseas and the corporate debt market is concentrated in the utilities sector.
Craigs has sought to have this issue listed on the NZX. The minimum investment is $5,000 and the term is five years.
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