ANZ National Bank has raised US$1 billion ($1.7 billion) in overseas funding, demonstrating that the Government's wholesale funding guarantee will help ensure offshore funding, on which our heavily indebted economy relies, remains accessible.
Although the BNZ has used the guarantee to raise $180 million domestically, ANZ National's issue this week
of US$1 billion in three-year bonds is the first offshore deal to employ it.
The ANZ National issue was announced yesterday after the Treasury said it had cut the fees on the guarantee for a second time, bringing them into line with those that apply to the Australian Government's equivalent scheme.
However the funds raised were not cheap, said ANZ National chief executive Graham Hodges.
"But in today's marketplace my perspective in terms of running the bank is to make sure we're well funded and sound in the sense of having a good structure around our funding."
The fixed-rate notes were priced at 250 basis points - including the 70-basis-point guarantee fee - over the three-year New Zealand wholesale rate which was in turn about 4.7 per cent on Thursday afternoon, suggesting ANZ National will pay about 7.2 per cent.
That is more than its current three-year fixed mortgage rate of 6.75 per cent.
Hodges said there was no direct correlation between retail rates, including those for mortgages, and the cost of overseas funds which was just one part of the "cocktail of structures and pricing" which made up the bank's funding book.
Nevertheless, he said it was clear that longer term overseas borrowing was now more expensive and would affect retail pricing over time.
