Updated: Council resumes bond offer, sets interest rate

Update: The interest rate was set at 3.338%.

Auckland Council opened a $100 million bond offer Thursday, closing Friday, with the ability to accept as much again in oversubscriptions. Fully subscribed, it will take council bonds traded on the NZX debt market over $1 billion.

The interest rate on the 10-year secured, unsubordinated fixed-rate bonds will be set on Friday after a bookbuild, allotments made next Wednesday, trading to open on Thursday 28 July. The council said the indicative margin over the swap rate was 0.9%/year.

The council announced its intention to issue the bonds in mid-June, then decided immediately after the Brexit vote in the UK to defer it because of the uncertainty.

The council has $825 million of bonds listed on the NZX debt market:

  • $250 million maturing 30 March 2020, paying 3.04%/year (AKC090)
  • $250 million maturing 24 September 2020, paying 4.017%/year (AKC080)
  • $200 million maturing 25 March 2024, paying 5.806%/year (AKC070), and
  • $125 million maturing 18 December 2018, paying 4.41%/year (AKC060).

The council said its new bonds were expected to be assigned a long-term credit rating of AA from Standard & Poor’s and Aa2 from Moody’s.

Attribution: Council releases.

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