Auckland Healthcare Services will issue a combined total of $120 million of 10- and 15-year bonds, the longest-dated bond issue in the local market by an issuer other than the central Government.
The issue comes as financial services group Tower also goes to the market to raise $100 million in capital
notes to buy Bridges Financial Services in Australia.
Government-owned Auckland Healthcare is offering $70 million of October 2010 bonds and $50 million of October 2015 bonds. The issue will be priced next Monday and settled two days later.
The bond issue, which is being arranged by Westpac's institutional banking arm, is also the first in the local market to be "credit wrapped," which will give it a AAA rating. Under a credit wrap, another party, typically an insurer, provides credit enhancement to the issue.
The credit wrap is being provided by New York-based MBIA Insurance Corp, says the health operator's chief financial officer, Ian Ward. MBIA is a specialist provider of credit enhancement to capital markets issues.
Auckland Healthcare's long-term Standard & Poor's rating is A+.
The bond issue is part of a $320 million capital markets and bank funding package negotiated by the health group. It has also arranged a commercial paper facility, which has an issue limit of $250 million.
Indicative pricing of the bonds is said to be 20 to 25 basis points above swap rate for both the 10-year bonds and the 15-year bonds.
Meanwhile, Tower will issue October 2001 notes at a yield of 30 basis points over the bank bill rate, which it will swap into Australian currency to pay for Bridges.
Chief finance officer Keith Taylor said it was still cheaper to raise the money in New Zealand, then swap it.
The company has $410 million of syndicated bank debt and could go on to replace about half of that via the commercial paper and note programme. Westpac is also the lead manager for the issue.
Tower has a Standard & Poor's credit rating of BBB/A-2.
- NZPA
