Heritage issues a $200 million Government guaranteed transaction

Heritage Building Society today announced the successful placement of $200 million Government guaranteed notes into the wholesale debt markets. The transaction was sole Lead Managed by UBS.

Heritage priced the $200 million of five year notes at 40 basis points over BBSW, a margin that compares favourably to the organisation’s previous five year Government guaranteed transaction completed in July 2009.

Heritage CEO Mr John Minz said he was delighted with the transaction. In explaining the rational for the deal, Mr Minz said that the imminent withdrawal on March 31 of the Government guaranteed wholesale funding arrangements meant Heritage had to bring forward plans for further wholesale debt issuance.

“Heritage wanted to take advantage while the window of opportunity remained,” he said.

“The Society had always intended to assess and take any opportunity in the wholesale markets into the future.

“As with our Government guaranteed transaction in July last year, Heritage is extremely pleased to once again access a spread of investors both domestically and via offshore markets. Heritage has undertaken this transaction at a good time with credit margins narrowing in the lead up to the end of the wholesale Government guarantee.”

Today’s transaction is the second time that Heritage has issued a senior debt public deal into the wholesale domestic markets. Last year’s $400 million transaction was heavily over subscribed by domestic and offshore investors.

“The Society’s successful completion of this transaction demonstrates our strong support within the wider market,” said Mr Minz.

He added that expanding the wholesale markets franchise has been a fundamental part of Heritage’s ongoing funding strategy, and he also noted Heritage was doing its best to compete as much as possible with the larger banks, despite the fact that the Society had to pay an inappropriate and unfair fee to receive the benefit of the guarantee.

“The fee arrangements imposed on smaller institutions are extremely inequitable and make it harder for Heritage to raise funding cost-effectively, but as Australia’s largest building Society, Heritage will continue to put People first as we work hard to provide a superior alternative in the Australian banking and finance sector.”

* Based on a $150,000 loan over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.