Banks' funding needs drive bond issuance up

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New Zealand corporate bond issuance over 2011 looks set to eclipse last year's total of around $6.5 billion.

According to specialised Australia and New Zealand debt reporting agency KangaNews, around $4.95 billion has been raised in the year to date, much of it issued to supplement banks' own funding requirements.

"At just over the halfway mark, we seem to be heading towards a much better year in total," Mike Faville, BNZ's head of capital markets, said.

BNZ was at the top of the table for deals, raising $1.69 billion, about 60 per cent of which was for the bank's own funding requirements. This was spread over nine deals, representing 34.1 per cent of the total issued by the market to date.

ANZ was not far behind, raising $1.48 billion, comprising 22 deals, and 29.9 per cent of the market.

ASB Bank came third, raising $845 million from one deal (17.1 per cent), followed by Westpac Institutional Bank, with $650 million (10 deals, 13.1 per cent).

"The interesting thing is that the year to date has been very much driven by wholesale issuance, not retail deals, so the vast majority of the issues have been targeted at the institutional investor and we expect that to continue to be the case for the next few months," Faville said.

"The retail market is not getting the supply that it might be looking for," he said.