KEY POINTS:
What is it called and what sort of savings product is it?
Westpac Medium Term Notes.
Who is the company behind it?
The issuer of these fixed interest securities is Westpac New Zealand Ltd. They are being promoted to investor through the bank's institutional arm. The notes are senior, unsecured and unsubordinated obligations on the bank.
Who is the target market?
Investors looking for a strong and simple fixed interest investment.
What return does it offer?
The interest rate will be set after the offer closes, but will be pitched at 1.30 per cent above the New Zealand dollar swap rate. Interest payments will be twice a year in March and September.
When was it launched?
The offer opened on September 8 and closes on September 26.
What other products is it like or is it competing with?
Many of the banks have been making these sorts of offers to investors, with the most recent being ASB Bank. Expect to see more of these types of offer this year. They provide a more secure fixed interest investment option than what is available from finance companies.
Is it long term, short term or medium term?
These are medium term fixed interest securities with a maturity date five years out on September 30, 2013.
What is the unique selling point?
Investors looking for strong and secure income investments will be attracted to the offer.
How strong a stomach do you need for it?
Mild. Assuming, as commentators say, that the Australian domiciled banks are in good shape to weather the current financial storm and don't have significant exposures to the sub-prime market, poor assets or some of the failed institutions.
Westpac, the issuer of the notes, has an AA Standard and Poor's rating.
What's the hitch?
These are a relatively low risk, vanilla investment option. The main drawbacks are that the notes are not listed, thus liquidity maybe a problem, and they appeal to people with reasonable sized portfolios as the minimum investment is $10,000.