Bank of China New Zealand (Ltd) raises NZ$150m inaugural NZD bond issue
16-Oct-2017 7:23 AM
Bank of China New Zealand (Ltd) has achieved a successful entry to the New Zealand Capital markets, raising NZ$150m in its inaugural NZD bond issue.
The five year bond will mature in October 2022 and has an expected A rating from Standard & Poor’s and an A1 rating from Moody’s, with an interest rate of 4.09% made up of the Base Rate (5 year swap rate of 2.74%) plus 1.35%.
Interest will be paid semi-annually in arrears.
The issue, which closed on Thursday 12 October, was from Bank of China New Zealand (Ltd)’s recently established NZD Medium Term Note programme.
Treasurer Craig Vickery said he was delighted with the outcome, which represented an important step forward in developing an ongoing domestic funding plan. The transaction was the largest NZD domestic issue by a Chinese bank to date and was well received by the market. The diverse investor base comprised of a wide range of domestic and offshore investors.
Mr Vickery said: “We are committed to support investors and we are looking to build a long-term sustainable funding platform to support our future balance sheet growth.”
The bond offers investors a favourable coupon yield when compared to other corporate issuers with similar credit ratings.
The NZ operation is guaranteed by Bank of China Ltd, the parent bank based in Beijing and one of the largest banks in the world by asset size.
Mr Vickery had a message for New Zealand investors. He said: “ New Zealand investors should get comfortable with Chinese credit as local Chinese banks become more involved in supporting NZ businesses. China is already New Zealand’s largest trade partner and plays a fundamental role in New Zealand’s economic performance."