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Giant ANZ bond issue to reset

Investors holding more than $800 million of bonds issued by ANZ Bank NZ are about to see the interest rate they receive slashed.

Friday, February 15th 2013, 4:18PM 1 Comment

by Niko Kloeten

In an announcement to the stock exchange today, ANZ NZ Treasurer Paul Daley said: “We wish to advise that ANZ Bank New Zealand Limited does not intend to exercise its right to repay its $835 million perpetual callable subordinated bonds on 18 April 2013.”

The bonds, issued in 2008, have a coupon of 9.66% per year but investors will be receiving considerably less once the rate is reset at a margin of 200 basis points over the five-year swap rate.

Today’s five-year swap rate is 3.49% so unless there’s a big change to the rate between now and April investors will be looking at a new coupon rate of about 5.5% per year for the next five years.

ANZ’s decision to let the callable bonds reset is in contrast to how a number of other banks have treated these bonds recently, with most opting to pay them back early.

It’s also a change for ANZ, which last year opted to call bonds issued in 2007 with a face value of $350 million and an 8.23% coupon that would have reset much lower.

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

« Strategic breaches likely: FMABNZ calls in $450m of notes »

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Comments from our readers

On 15 February 2013 at 8:26 pm Peter X said:
Oops, hair cut coming for investors. I wonder if ANZ has thought this one beyond saving a quid, considering a number of the bond issue was taken up by dumb customers as a result of it (the bond) being touted through its branch network?

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