Rabobank sets initial interest rate for bonds

Rabobank Nederland has set the rate on its $900 million capital securities offer which closed fully subscribed.

The Dutch-based bank today set an initial interest rate for the first 12 months of 9.482 per cent, which reflects a margin of 0.76 per cent over the one-year swap rate.

The interest rate will be reset annually until 2016 at 0.76 per cent over the prevailing one year swap rate.

After that, the interest rate will be reset quarterly at the same margin over the prevailing 90-day bank bill rate.

The company said earlier that demand for the unsecured but triple A-rated securities "substantially exceeded" $1 billion.

It has applied to list the securities on the stock exchange.

The $900 million offer - increased from the $400 million offer initially announced in September - is New Zealand's largest ever non-Government debt issue.

The bank appears to have benefited from a flight to quality in the wake of the collapse of 10 New Zealand's finance companies over the past 17 months.

- NZPA