Kangaroo bonds are Australian dollar-denominated bonds issued by non-resident entities in Australia. Most issuers are supra-nationals and sovereign agency entities but there are also a few private sector financial institutions and corporates which issue bonds in Australia even if they have no business operations here.
A small number of issuers are from New Zealand. Auckland Airport issued $110 million worth of kangaroo bonds this very week. Auckland Council has become a regular issuer and it last issued $50 million September 2027s in July, while Kiwibank has been much more sporadic and it has issued kangaroo bonds only twice since 2009. Spark Finance has just become the latest New Zealand corporate to join them.
Spark is a subsidiary of Spark New Zealand (formerly Telecom New Zealand). Group revenue was in the order of NZD$3.6 billion (AUD$3.3 billion) in 2017 while total assets amounted to around USD$3.3 billion (AUD$3 billion). Spark senior debt is rated “A-“ by S&P.
Spark will issue bonds with a coupon rate of 4.00% and an October 2027 maturity date. Initial guidance for the pricing of its inaugural kangaroo bond transaction was 130bps over 3m BBSW.
Demand for the $150 million worth of bonds on offer drove the final price 10bps tighter according to the Commonwealth Bank.
Spark has issued the majority of its existing bonds in its home New Zealand currency, including two series of bonds which are listed on the NZX. It also has £125 million May 2018 bonds and £150 million April 2020 bonds which were issued into the U.K bond market in 2011.