Rabobank to offer PIE securities

23:53, Jul 07 2009

Rabobank Nederland, the Dutch bank which raised $NZ900 million in New Zealand in 2007, is signalling a return to the New Zealand market.

Rabo Capital Securities Ltd (Rabo Capital), a wholly-owned subsidiary of Rabobank Nederland, said it is considering selling up to $NZ200 million of Portfolio Investment Entity (PIE) Capital Securities to the public. These are like perpetual preference shares in that they pay quarterly dividends at a fixed rate for the first five years.

The sale is to both retail and institutional investors and the bank has an unlimited ability to accept oversubscriptions. When the bank went to the market in 2007 it was initially selling $NZ400 million of capital securities. These securities traded in a secondary market in New Zealand.

Rabobank said today that the Capital Securities will have a minimum dividend of 8 percent per annum, equivalent to 9.03 percent annum on a non-PIE investment for a retail investor on a 38 percent income tax rate.

Rabo Capital will qualify as a PIE, meaning investors in the securities will have their tax on dividends capped at 30 percent.

It is expected the PIE Capital Securities will be assigned a rating of AA minus from Standard and Poor's and Aa2 from Moody's.

The bank is currently only signalling an intention to offer so money is not currently being sought.

The offer is expected to open on April 27.