KEY POINTS:
What is it called and what sort of savings product is it?
Wellington International Airport unsecured bond offer.
Who is the company behind it?
The bonds are issued by Wellington International Airport (WIAL) which is seeking to raise up to $100 million. The money raised is to be used to fund investments such as an expansion of the international terminal and improvements to runway safety, and also to repay bank debt.
Who is the target market?
Fixed interest investors who want a longer-term option other than what institutions with government guarantees are offering.
What return does it offer?
The initial interest rate has been set at 7.50 per cent. They are scheduled to make six-monthly interest payments in May and November each year.
When was it launched?
The bonds took off on December 2 and the offer closes on April 1.
What other products is it like or is it competing with?
This is up against many other fixed interest offers in the market including ones from Genesis and South Canterbury Finance.
Is it long term, short term or medium term?
This is a medium term investment with a maturity date of November 15, 2013.
What is the unique selling point?
The key features are that it is an investment grade, medium term investment.
How strong a stomach do you need for it?
To give an idea of risk the bonds have a Standard and Poor's rating of BBB+, which puts them into the investment grade category.
What's the hitch?
There has been a warning sounded that WIAL has a covenant which allows its debt to get up to 70 per cent of assets. This is extremely high and unusual in an environment where a key investment theme is decreasing debt.
The bonds are not government-guaranteed and not PIE compliant.
Also WIAL is 66 per cent owned by Infratil which also has a significant stake in Trustpower. Investors should be aware of this if they already have these assets in their portfolios.
