Westpac NZ five-year bond pricing doesn't look too attractive for retail investors

Westpac New Zealand has launched a five-year bond offer that’s likely to pay investors about 3.73% per annum.

The issue, of fixed-rate, senior, unsecured and unsubordinated bonds, targets retail and institutional investors with a minimum bond application and holding amount of $5,000.

The bonds will be priced on Wednesday, with the interest rate set at between 0.95% to 1% per annum over the five-year swap rate. Based on Monday’s swap rate of 2.73%, that means an interest rate of about 3.73% per annum for investors.

Westpac’s own five-year term deposit rate is currently 4.10%.

Westpac is looking to borrow NZ$100 million, potentially plus unlimited over-subscriptions. The money raised will be used for general corporate purposes, including making loans available to Westpac NZ’s customers, the bank says.

The bonds are due to be issued this Friday.

Westpac’s Product Disclosure Statement is here.