Kiwi Property to raise up to $125M in bond offer   23 Aug 2016

Kiwi Property to raise up to $125M in bond offer, ANZ NZ eyes local debt market

By Paul McBeth

Aug. 23 (BusinessDesk) - Kiwi Property Group plans to raise as much as $125 million in a bond offer it put off in June after the UK's unexpected vote to quit the European Union left financial markets in turmoil, while ANZ Bank New Zealand is mulling a $200 million local debt issue.

Auckland-based Kiwi Property is selling $75 million of seven-year fixed rate senior secured bonds with oversubscriptions of up to $50 million, it said in a statement. The bonds will pay a minimum annual interest rate of 4 percent, and have an indicative margin of 1.65 percent to 1.85 percent. New Zealand's seven-year swap rate was recently at 2.24 percent.

Funds raised from the bonds will repay bank debt and go to general corporate purposes. Of Kiwi Property's $1.13 billion of total facilities, it's got $50 million of bank debt coming due in 2018, followed by $258 million in each of the following years and $259 million in 2021.

Kiwi Property put off a planned bond sale in June after the Brexit, which stoked volatility in financial markets. The real estate investor already has $125 million of listed debt on the NZX which matures in 2021. Those bonds pay annual interest of 6.15 percent and are trading at a yield of 3.6 percent.

Deutsche Craigs and Westpac are joint lead managers of the offer with Bank of New Zealand a co-manager. The bookbuild to set the interest rate will close on Aug. 31, when firm allocation will be made. The offer doesn't have a public pool.

Companies have been returning to the debt market in droves this year as record low interest rates reduce the cost of funding. NZX figures show $552 million of new capital has been listed on the debt market in the year to July, with the number of debt issuers up 24 percent to 98 from July 2015 and trading volumes 29 percent higher.

Separately, ANZ Bank New Zealand, the local unit of ASX-listed Australia & New Zealand Banking Group, said it was considering two offers of unsecured unsubordinated bonds to institutional and retail investors. One would be a $100 million five-year bond and the other a $100 million seven-year note, with scope to accept unlimited over-subscriptions.

New Zealand retail banks have started competing more aggressively for term deposits to help fund their rapidly expanding loan books, raising the rates on savings accounts earlier this month even after the Reserve Bank lowered the official cash rate.

Earlier this month the RBNZ noted longer-term wholesale funding costs increased early this year on heightened volatility in financial markets and as investors grew concerned about the profitability of banks globally.

(BusinessDesk)

Add a comment