tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, December 5th, 7:44PM

Investments

rss
Latest Headlines

Interest in corporate debt reigniting

Dwindling prospects for further interest rate hikes by the Reserve Bank this year may stoke interest in corporate bonds as investors seek certainty of income.

Wednesday, September 8th 2010, 3:39PM

Economists have pared back their expectations for central bank Governor Alan Bollard's tightening track  this has reignited interest in corporate debt, with a flurry of small issuance in recent weeks, including Goodman Property Trust's private placement, Greenstone Energy, TrustPower, and Manukau City Council.

"There's an acceptance that the Reserve Bank looks to be on hold, and corporate bond deals are offering some value," he said. "With risk off, more investors are looking at income assets."

Debt issuance is way down in 2010, based on securities that trade on the NZX, with some $1.2 billion raised in the year through August, compared to $3.02 billion a year earlier, when interest rates were at record-low levels.

Hassell said corporate debt was looking more attractive than government debt, even with companies already tidying up their books in response to the global financial crisis, while many sovereigns were still in the process of doing so. 

Goodman's chief financial officer George Crawford said an institution asked the property investor to add a private placement to its $150 million retail bond last year, which it accepted to help push out its funding maturity profile.

 Goodman raised $45 million in a seven-year bond paying 7.58% per annum, compared to the 7.75% interest payment on the five-year retail bond which was launched last November.

Infratil-controlled TrustPower flagged an intention to raise up to $100 million, though it hasn't put a price on the offer, while the Infratil-NZ Super Fund joint venture Greenstone is looking to raise up to $200 million at an annual 7.35% for six years. Manukau City's seven-year issue is looking to raise $350 million at 6.45%. 

ING fixed interest manager Andrew Michl said the recent bond issuance was small, mainly soaking up what demand there was. Any large issuance will need to put up more attractive returns to bring in investors, he said.

"If they wanted to raise two or three hundred million, they'd need a higher offer," Michl said. "Seven and a half, eight percent for retail issuance would help it up."

Siphoning off demand for bonds is the deposit war among banks, which has pushed up 12-month rates to as high as 5.6%, according to Michl.

"You've got to get some premium to justify holding money out," he said.

Businesswire.co.nz

 

 

« What to do with your South Canterbury moneyF&P Finance relying more on cheaper bank loans »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Today's Best Bank Rates
Rabobank 5.25  
Based on a $50,000 deposit
More Rates »
News Bites
Latest Comments
  • Partners kills its matrix
    “@Backstage, thanks. I agree there is no relationship to CoFI, though, from a service perspective, I have two other providers...”
    2 days ago by JPHale
  • Partners kills its matrix
    “Partners Life has decided to stop using its COM for advisers as it believes the system may breach the CoFI regulations which...”
    2 days ago by Amused
  • Partners kills its matrix
    “Insurance companies should stick to their lane. They are not advisers and even those that employ advisers should not be crossing...”
    2 days ago by Tash
  • [GRTV] The nitty gritty of Smart’s ETFs
    “Advisors should consider all gateways into investment markets including cheaply priced ETFs to provide access to low priced...”
    3 days ago by Pragmatic
  • DRS member or not - client care remains advisers’ responsibility
    “FAPs are members of DRS too. Substitute “adviser” for “FAP” and the story is actually a lot more accurate. If...”
    3 days ago by Aggressively_passive
Subscribe Now

Deposit Rates newsletter

Previous News

MORE NEWS»

Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com