KEY POINTS:
What is it called and what sort of savings product is it?
Auckland City Council secured fixed rate bonds.
Who is the company behind it?
The bonds are being issued by the Auckland City Council (ACC) for general financing purposes and, if required, to repay debt and be used for capital expenditure. The council is looking to raise $100 million and the offer is being run by BNZ Capital, Westpac Institutional Bank and First NZ Capital.
Who is the target market?
All those people who want income from their investments who don't want a lot of risk and don't want to go near shares.
What return does it offer?
These bonds have a rate of 6 per cent or a margin of 2 per cent over the swap rate at date of issue - whichever is the highest.
When was it launched?
The offer opens on February 23.
What other products is it like or is it competing with?
All those other offers in or coming to the market including Fonterra, NZ Post, Tower and Meridian. A comparison table of the current offers is on depositrates.co.nz
Is it long term, short term or medium term?
The bonds have a five year term.
What is the unique selling point?
Sometimes it is hard to make a bond different. Perhaps the biggest selling point is that investors are getting exposure to a council, which can generate revenue easily through rates. It's hard for their customers to disappear.
How strong a stomach do you need for it?
Many of our local councils have very strong credit ratings. ACC has a AA from Standard and Poor's which puts it into the relative safe end of the spectrum.
What's the hitch?
The rate is one of the lower on offer for bonds at the moment, but not as low as the Meridian Renewable Energy Notes profiled in a previous Money At Work.
