What is it called and what sort of savings product is it?
Westpac (NZ) Ltd Fixed Rate Notes. These notes are senior, unsecured and unsubordinated.
Who is the company behind it?
The issuer of these fixed interest securities is Westpac New Zealand Ltd. They are beingpromoted to investor through the bank's institutional arm.
Who is the target market?
Investors looking for a strong and simple fixed interest investment.
What return does it offer?
The actual rate will be set on November at 130 basis points over the swap rate. As an indicative rate it would be around the 7.30 per cent rate.
When was it launched?
November 12.
What other products is it like or is it competing with?
Currently there seems to be a string of offers like this coming out from banks. Also some other institutions like PGG Wrightson are making offer. The other place investors seeking fixed income can look are on similar offers made last year which can be bought on the secondary market. Currently some of the pricing of existing offers looks attractive.
Is it long term, short term or medium term?
This is a long term investment maturing on November 28, 2013 with interest payments made twice yearly in May and November.
What is the unique selling point?
One of the things investors need to understand in this market is the importance of locking in some longer duration fixed income investments as rates will come down. While it is possible to get attractive rates in the two year period the government's deposit guarantee scheme is in place, investors need to think about what they will be reinvesting at after then.
How strong a stomach do you need for it?
Westpac has an AA Standard and Poor's rating which puts the notes into the pretty safe basket.
What's the hitch?
The notes are not covered by the government's deposit guarantee scheme, nor are they PIE compliant. Also the minimum investment is $10,000.
