Rates round-up: October 8
Auckland Council to issue bonds; GPG to pay back capital notes; Cash fund investors to make their choice
Monday, October 8th 2012, 6:00AM
by Niko Kloeten
Auckland Council says it's considering making an offer of fixed-rate, secured bonds to the public and is seeking preliminary indications of interest.
The Council has appointed ANZ and BNZ as joint lead managers.
"The bonds would form part of council’s overall borrowing programme to fund its investment in the region that will benefit all Aucklanders for generations to come," Auckland Council says.
"Projects funded by the borrowing would include improved public transport, sports fields, new libraries and community facilities."
Meanwhile, the Local Government Funding Agency, of which Auckland Council is a member, has attracted strong interest in its latest auction.
Both its 2017 and 2019 issues were heavily oversubscribed, with the 2017 offer of $95 million receiving bids of $326 million and the 2019 offer of $180 million receiving bids of $596 million.
The average weighted successful yields were 3.58% for the 2017 bonds and 3.92% for the 2019 bonds.
GPG to pay back capital notes
Guinness Peat Group has confirmed it will buy back its last tranche of outstanding capital notes, which have a principal value of about $350 million.
GPG has the option to purchase the notes on their election date of November 15 under the trust deed.
"GPG has previously announced its intention to exercise this option, and has now formally determined to exercise it. Accordingly, all of the 2012 notes will be purchased by GPG on their 15 November 2012 election date," the company says.
Noteholders will be sent a notice of GPG's exercise of the option, and details of the process for payment.
GPG says trading in the notes will be suspended at the end of October 30, with the final regular quarterly interest payment made on November 15.
The notes were issued in 2006 and pay an interest rate of 8.3% per year.
Cash fund investors to make their choice
Investors in Perpetual’s CashPlus Fund will vote today on the way forward for the fund, which has been affected by the FMA’s related-party loan investigation.
The Fund is currently not taking in new investments but otherwise is open to redemption requests and continuing to accrue interest.
About 20% of the fund is invested in the Perpetual Mortgage Fund, which has been frozen and is in the process of being wound up.
According to Perpetual, the issues with the Mortgage Fund “present a challenge to the liquidity of the CashPlus Fund that may ultimately inhibit the CashPlus Fund from operating normally”.
It has outlined two options: to retain the Mortgage Fund units within the CashPlus Fund, or; to undertake an 'in specie transfer' of the Mortgage Fund units out of the CashPlus Fund and into a direct holding in investors’ portfolios.
Perpetual has recommended option two, saying option one may be result in the suspension of withdrawals in the CashPlus Fund, which would mean the fund would likely enter moratorium until the Mortgage Fund wind-up has completed.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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