BNZ calls in $450m of notes

Bank of New Zealand parent National Australia Bank (NAB) has opted to call nearly $450 million of BNZ Income Securities perpetual shares.

Wednesday, 20 February 2013

by Niko Kloeten

The perpetual non-cumulative shares, which were issued in 2008, pay a coupon of 9.89% but would have reset to a much lower interest rate after reaching the five-year mark on March 28 had NAB not chosen to repay investors instead.

The coupon rate for the next five years would have been set at 220 basis points over the five-year swap rate, which based on today’s rate, would have been about 5.8%.

"BNZ Income Securities Limited wishes to advise that National Australia Bank Limited (BNZ's parent) is exercising its right to call the shares on the Call Date, being 28 March 2013," the bank said in an NZX announcement today.

"We wish to advise you that the persons recorded on the Share register as the holder of the Shares as at 5pm on 18 March 2013 (being the Record Date for the purposes of the NZX Listing Rules) will be the persons who will receive the payment for the Shares, and the dividends accrued on the Shares, on 28 March 2013."

"We have requested NZX Limited to place a trading halt on the Shares from the opening of business on 14 March 2013 until 28 March 2013, being the date upon which the transfer of the Shares will occur. On this basis, the last day of trading of the Shares will be 13 March 2013."

BNZ’s decision comes less than a week after ANZ announced it would allow its subordinated bond issue of $835 million, with a coupon rate of 9.66%, to reset.

The BNZ perpetual shares rose by 2.8% to $101 per $100 face value after today’s announcement.

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