ASB Bank unlocks the new funding source for supporting Kiwi majors meeting the capital requirements from the Reserve Bank of New Zealand. The bank rated (A1/AA-/A+) is actually its first offshore subordinated bond sale by a New Zealand Bank. A banker on this trademarked that this bond is a strategic transaction. Thus, other New Zealand banks could follow this transaction.
The $600m Tier 2 note has finally attracted demand out of Asia for as much as $1.6bn. Plus, there is an impressive booking order on more than 80 accounts for as much as $2.7bn. Oversea-Chinese Banking Corp has finally unlocked Asian investors’ appetite. This is because of their pick-up over $750m of 10-year non-call five Reg S Tier 2 notes. The rate is A2/BBB+/A with a high support locally.
This interest scenario attracted ASB Bank’s joint bookrunners like Barclays, CBA, Citigroup, and HSBC to purchase the 144A/Reg S. This is a 10-year non call five note 25bp indie the initial 250bp area. According to the lead, it is parallel to the Australian major that would purchase Yankee Tier 2 notes. In other words, it is in contrast with 10bp premium New Zealand majors that pays over their Australian parents in overseas markets.
Australian majors also get the benefit from the greater size with a higher Moody’s rating in the senior space. This is A3 versus A1 in New Zealand major bank Tier 2 notes. This rate is actually higher than its Australian rivals and peers which is A3/A- (Moody’s/S&P) versus Baa1/BBB+/A-. his advantage actually mirrors the absence of a non-viability under the New Zealand regulation. Furthermore, these Tier 2 notes cannot become equity if the market sentiment raises. It is different from Australia that allows Tier 2 conversion.
