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Auckland gets big sale of seven-year bonds to investors away

Fuseworks Media
Fuseworks Media

Wellington, Sept 27 NZPA - The new Auckland Council has effectively raised $350 million before it comes into existence on November 1.

Manukau City Council has raised $350 million by selling seven-year notes, or bonds, to retail and institutional investors. Auckland Council, which will take over from Auckland Regional Council and the seven city and district councils, assumes the obligation when it comes into existence.

The bonds were sold at 190 basis points above the swap rate of an equivalent maturity, David McCallum, director of debt capital markets at Craigs Investment Partners told NZPA.

Manukau was seeking to sell $250m of the bonds but had the ability to accept $100m of over-subscriptions and it has decided to do this.

The bonds are issued at $1 each and pay a coupon rate of 6.52 percent. They mature on September 29, 2017. They will trade on the NZDX market.

The sale is one the largest retail bond and largest seven-year bond sales in New Zealand.

Mr McCallum said $250m of the total was sold to retail investors and the rest was sold to institutional investors.

"The offer was very well received," he said. "Councils are seen as very strong credit," he said.

Auckland Council cannot hold a retail bond sale until after it has published its first set of annual accounts.

ANZ National Bank Ltd and Craigs Investment Partners Ltd were arrangers and joint lead managers of the issue. First NZ Capital Securities and Goldman Sachs & Partners New Zealand were joint lead managers and Forsyth Barr was a co-manager.

The bonds are unrated but Auckland Council intends top obtain a long-term credit issuer rating.

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