KEY POINTS:
What is it called and what sort of savings product is it?
Kiwibank is looking to raise $75 million in unsecured, subordinated bonds.
Who is the company behind it?
While our Government-owned Kiwibank is raising the money it is using ABN Amro to market the issue.
Who is the target market?
It will appeal to mum and dad investors wanting a good yield and it will have a feel-good factor.
What return does it offer?
The interest rate will be set on March 15. It will be expressed as a specific margin over the five-year swap rate.
When was it launched?
It is understood the offer will be launched on March 20.
What other products is it like or is it competing with?
All the finance-company offers and quite possibly bank term deposits.
Is it long, short or medium term?
The bonds will have a 10-year time frame, but are likely to be tradeable on a market like the NZDX.
What is the unique selling point?
No doubt they will be promoted as your way of owning part of the bank which it seems lots of Kiwis love. But remember this time you are being given a choice about funding Kiwibank. In the past the Government has just given it capital from our taxes. The tapping of the local debt market for the first time is a milestone for the bank as NZ Post has so far provided all of its capital in the form of $200 million of equity.
At 10-years, the offer is one of the longer-dated ones in the market place.
How strong a stomach do you need for it?
It is thought the bonds will have an A+ credit rating which is a "strong" investment grade rating and reasonably safe.
What's the hitch?
That the bank gets into trouble. But this Government won't let it fall over. There is no sign of a dividend to the Government for years to come but the state-owned bank is continuing to sign up 400 to 500 new customers a day, around the level it has consistently notched up since opening. It now has 500,000 customers.
The state-owned bank reported an after-tax profit of $11.37 million in the six months ended December 31, double the $5.45 million for the same period last year.
