Macquarie New Zealand aims to raise up to $75 million from individual investors through an issue of floating interest rate notes with a projected interest rate of 11.5 per cent.
Aimed at "Mums and Dads" currently investing in higher risk finance company debentures with lower interest rates, Macquarie's Fortress Notesmature after seven years and pay two different income streams.
The first one is an interest rate based on the New Zealand bank bill rate, which is currently about 7 per cent. The second stream comes from leveraging the principal by about six times and then investing that leveraged amount in the high yielding US corporate bond market.
This stream is projected to receive a further 4.5 per cent in current conditions, with the combined total of 11.5 per cent being net of fees.
There are establishment costs of 2.5 per cent and annual investment management fees of up to 1.2 per cent.
Macquarie said the Fortress Notes issue would give retail investors a rare chance to gain exposure to the US corporate senior loan market, where more than U$S300 billion worth of sub-investment grade debt was issued last year.
The money will be managed by Los Angeles based Four Corners Capital Management, which is two-thirds owned by Macquarie and manages a total of U$S2.7 billion of assets.
