KiwiBank seeks $150m in bond issue

State-owned Kiwibank is signalling it will raise up to $150 million through the sale of perpetual preference shares, which are effectively bonds, to the public.

Kiwi Capital Securities Ltd is considering selling $100m of the perpetual callable non-cumulative preference shares, to be known as Kiwi Income Securities, to the public with the option to accept over subscriptions of up to $50m.

The shares will not entitle holders to any voting rights in Kiwibank, and have only limited voting rights in relation to Kiwi Capital Securities, whose ultimate parent is New Zealand Post Ltd. State-owned New Zealand Post owns Kiwibank.

The announcement of the planned capital raising did not detail the dividend payment of the shares. The payment is fixed for an initial five years and is then reset for subsequent five yearly periods at a margin above the swap rate applying at the time. Dividends will be paid quarterly and are non-cumulative.

The proceeds from the issue of the shares will provide tier 1 capital to Kiwibank.

When reporting its interim profit Kiwibank said the cost of sourcing local funding would be a lot higher from April 1 when Reserve Bank of New Zealand rules require a 65 percent liquidity ratio.

The shares will have no maturity date. They may be called on the fifth and tenth anniversary of their issue date and quarterly thereafter.

The offer is expected to open in early April and the full details will be in an investment statement and prospectus.

- NZPA