|
New Zealand ending 2008 with wave of retail corporates |
Retail demand in New Zealand appears to be holding up in the last few weeks of the year with a clutch of corporate and finance company transactions – the majority not benefiting from the government’s guarantee on retail funding – which could raise up to NZ$825 million (US$437 million).
The most recently announced deal came from Wellington Airport (BBB+) on December 2, in the form of a 7.5 per cent coupon 2013 offering led by ANZ National Bank (ANZ) and First NZ Capital (First NZ). The offer is for NZ$50 million with room to increase that to NZ$100 million; ANZ’s Wellington-based director, debt capital markets, Chris O’Neale, confirms the issue is a retail deal.
New Zealand’s retail investors have already demonstrated that they prefer the yield and duration of non-guaranteed debt from local banks – the terms of the retail guarantee only extend to two-year tenors – and that trend is reinforced by the raft of recent corporate transaction launches, the majority of which come from issuers that do not qualify for the guarantee.
Genesis Energy (BBB+) launched its retail offering on November 25 with lead manager ABN AMRO New Zealand, seeking NZ$150 million (and a potential upsize to NZ$225 million) across 2014 and 2016 maturities. In a statement, the firm confirms: “While Genesis Energy is government owned, potential investors should note that the Crown does not guarantee the bonds or any of the other obligations of Genesis Energy.”
Institutional investors in New Zealand have been feeling the impact of the attractive yield from guaranteed deposits, but the appeal of lower-rated fixed income investments is also causing consternation. One fund manager contacted by KangaNews says: “Retail investors continue to be willing to buy at levels which just aren’t acceptable to instos. That has always been the case, and in a market like New Zealand which has high retail involvement in fixed income the insto market has always had to deal with that, but at the moment we are really being squeezed.”
The appetite for yield in the retail investor base appears to stretch even beyond utilities. On November 24 unrated, unguaranteed Fletcher Building Finance – the capital arm of building materials manufacturer, distributor and contractor Fletcher Building Group – opened a subordinated offering of NZ$100 million of 2014 and 2016 notes with room to double the size of the deal if oversubscribed. The 9 per cent coupon transaction is being arranged by First NZ with joint lead managers ANZ and Goldman Sachs JBWere.
The final live corporate deal is from TrustPower – also an unrated credit, though market sources say it would likely receive a triple-B rating if it was assessed by an agency. Its transaction, which is being led by ABN AMRO Craigs and First NZ, offers an 8.4 per cent coupon and can be redeemed for cash by the issuer at any point up to 25 business days before the December 2015 maturity.
Lead managers on both deals expect them to sell to a retail investor base, while fund managers say they are also unlikely to participate in a transaction from finance company PGG Wrightson Finance (BBB-), a firm that is on the list of those approved for the guarantee scheme, which opened on November 19. The 2010 maturity offer has already been oversubscribed and therefore increased from NZ$75 million to NZ$100 million, with Mark Darrow, director, financial services at the issuer, commenting on the “strong expression of interest in the company, which is very gratifying at a time when many other finance businesses are struggling.”
The PGG Wrightson transaction is priced at a margin of 225 basis points over mid rate swap; the last comparable issuer to come to market in New Zealand was MARAC Finance (BBB-), which sold a 2013 transaction in July for 275 basis points over swap.
|
|
Last Updated ( Tuesday, 02 December 2008 )
|
