Tower's 5-year bonds pay 8.5%; Auckland Airport completes sale

Thursday 5th February 2009

Tower may sell as much as $100 million of five-year bonds paying annual interest of 8.5%, taking advantage of investor demand for high fixed-income payments as deposit rates fall.

The insurer is seeking indications of interest in the sale before making an offer, it said in a statement. The offer would be for NZ$80 million of the senior bonds with over-subscriptions of NZ$20 million.

Companies ranging from state-owned utility Meridian Energy to dairy exporter Fonterra Cooperative Group are selling debt securities that offer a relatively attractive return as deposit rates slide and investors sit on the sidelines of equity markets.

ANZ Bank offers an interest rate of 3.5% on a two-year term deposit of at least $5,000, according to http://www.depositrates.co.nz. National Bank's Thoroughbred Saver account pays 2.75% for a minimum, of $5,000.

South Canterbury Finance today said its Oct 8, 2010, bonds paying 8% were snapped up without the need for a public pool, raising $100 million including oversubscriptions. The finance company has the option of extending the maturity a further 12 months if the Deposit Guarantee Scheme is extended. Auckland International Airport completed its sales of $50 million of retail bonds maturing Feb. 28, 2014.

"We believe this is another indication that investors view Auckland Airport bonds as an attractive investment option, particularly during this challenging economic climate," chief financial officer Jason Dale said.

Fonterra is offering $300 million of six-year bonds paying a minimum 7.75%. State-owned Meridian Energy this week offered to sell fixed-rate notes maturing in 18 months or less at interest rates.

By Jonathan Underhill

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