Rabo seeks money for new securities
Money At Work: This week we look at the new perpetual securities offer from Rabo. The rate hasn't yet been set for this offer, but investor demand is huge, partly because of its perceived safety.
Sunday, September 16th 2007, 9:16AM
What is it called and what sort of savings product is it?Rabobank Nederland has seeking to raise $400 million of capital securities. These are unsecured, subordinated perpetual securities. This offer is quite distinct from the online savings accounts and term deposits offered by RaboPlus.
Who is the company behind it?
Rabobank is one of the largest banking organisations in the Netherlands. In New Zealand it operates a rural banking business, plus the high profiles savings and investment business RaboPlus.
Who is the target market?
Investors looking for a reasonably safe, fixed interest investment.
What return does it offer?
The rate has yet to be set, but is likely to be in the 9-9.25% range for the first year. After that the rate will be reset annually at a fixed margin over the one-year swap rate.
When was it launched?
The offer opens on September 17 and is scheduled to close on October 5.
What other products is it like or is it competing with?
At the moment this offer is directly competing with Origin's preference shares profiled last week in Money At Work.
Is it long term, short term or medium term?
This is an investment which suits the medium to long-term investor.
What is the unique selling point?
In the current market Rabo's Standard and Poor's AA rating will provide some comfort to investors worried about risk. (This is lower than the rating RaboPlus has for its online call account). Likewise, the offer will be listed on the NZDX market so investors can sell their investment if they want out.
How strong a stomach do you need for it?
An AA rating puts this at the low risk end of the investment spectrum.
What's the hitch?
Perhaps the biggest hitch is that these are perpetual bonds, that is they don't have a maturity date. However Rabo does have an option to buy them back in 10-years time.
Also because the securities have no end date investors selling their investments will have to pay some brokerage.
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