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Secured fixed rate bond issue Manukau City Council 2010 David Foster Director Finance, Manukau City Council Andrew McKenzie Chief Financial Officer, Auckland.

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Presentation on theme: "Secured fixed rate bond issue Manukau City Council 2010 David Foster Director Finance, Manukau City Council Andrew McKenzie Chief Financial Officer, Auckland."— Presentation transcript:

1 Secured fixed rate bond issue Manukau City Council 2010 David Foster Director Finance, Manukau City Council Andrew McKenzie Chief Financial Officer, Auckland Council Mark Butcher Treasurer, Auckland Council

2 The Offer Issuer Manukau City Council Description Fixed Rate Secured Bonds Security First ranking charge over all rates and rates revenue of Manukau City Council Rating The issuer does not intend to have the bonds rated Issue Amount Up to $250,000,000 (with the right to accept over subscriptions of up to $100,000,000) Term 7 year maturity (29 September 2017) Use of Proceeds The general financing requirements of the existing Councils until 1 November 2010; and the general financing requirements of the Auckland Council after 1 November 2010. Some or all of the proceeds will be on lent to other councils in the region. Interest Rate The Interest Rate will be set as the higher of: a) the Minimum Interest Rate; or b) the sum of the Swap Rate and the Issue Margin.

3 Introduction Manukau City Council Auckland Council The Auckland region Key points Terms of the bond offer

4  Requested by the Auckland Transitional Agency (ATA)  Established process to undertake successful bond issue  Integrated treasury management for the region Why Manukau City Council

5 Manukau Credit Profile Local Government Act ensures fiscal discipline Statutory ability to rate mitigates default risk Debt obligations secured by charge over rates Guarantee provided to Auckland City Council for Watercare in proportion to shareholding

6 Coordinated by ATA on “best for region” basis Integration of existing treasury functions & coordinating debt funding This Bond Offer is part of coordinated borrowing programme Auckland Council assumes all rights and obligation for the bonds issued under the offer on 1 November 2010 Interim treasury arrangements

7 Legislation establishing Auckland Council: 1.Local Government (Tamaki Makaurau Reorganisation) Act 2009 2.Local Government (Auckland Council) Act 2009 3.Local Government (Auckland Transitional Provisions) Act 2010 Robust legislative structure contained in Local Government Act 2002 continues through to Auckland Council: –statutory ability to rate allows Auckland Council to set and assess a general rate on each rateable property within its district New Auckland Council

8 1 AugustInterim Chief Executive took up role August - OctoberATA continues to confirm the organisation structure, finalise staff transfers and progress amalgamation projects 9 OctoberLocal authority elections for mayor, councillors and local boards 14 OctoberDeclaration of results 1 NovemberAuckland Council commences (ATA and existing councils disestablished) Eight-month Auckland Council Annual Plan commences Key dates 2010

9 Auckland Council governance Local boards Governing body (mayor and 20 councillors) Auckland Council organisation (through the chief executive) Council controlled organisations Policy, planning and service delivery Local input Region - wide framework Support and advice Implement decisions Engagement on plans & service delivery Accountability

10 Council Controlled Organisations (CCO) AUCKLAND COUNCIL Watercare Services Limited Auckland Council Investments Limited Auckland Tourism, Events and Economic Development Limited Auckland Transport Agency Auckland Waterfront Development Agency Auckland Council Property Limited Regional Facilities Auckland

11 Executive structure AUCKLAND COUNCIL –Mayor and councillors/council committees –Local boards/board committees Independent board promoting issues of significance for mana whenua and Maori of Tamaki Makaurau Interim Chief Executive Doug McKay Chief Operating Officer Patricia Reade Chief Planning Officer Dr Roger Blakeley Chief Financial Officer Andrew McKenzie Establishment Director Trish Langridge Office of the Chief Executive –Manager Human Resources –General Counsel & Legal Services –Manager Risk and Assurance –Manager Communications and Public Affairs –Manager Civil Defence Mayoral Office –Chief of Staff –Strategy and Communications Support Treasurer Mark Butcher

12 Annual reports Annual plan and reporting process Existing councils prepare FY10/11 plans (applies to 31 Oct. 2010) ATA prepares plan to apply from 1 Nov 2010 until 30 June 2011 and long-term plan (to apply until 30 June 2019) for Auckland Council Auckland Council prepares FY 2011/12 annual plan by 30 June 2011 Audited accounts for 16 months to 31 October 2010 are prepared for the existing councils Auckland Council’s first set of audited accounts - for 8 months to 30 June 2011, then annually (with interim accounts) Annual plans

13 Auckland Council Treasury Treasurer began role 2 August, seven other treasury roles being filled Centralised treasury function ATA approved Treasury Policy and operational risk framework Review of borrowing programmes and bank facilities to ensure liquidity and diversified funding sources Credit rating process underway Security Trustee and Registrar and Paying Agent selected

14 Auckland region – key financial and economic hub New Zealand’s largest unitary authority representing (approximately) –1.3 million population (33% of NZ) –511,000 rateable properties –645,000 employees –156,000 businesses New Zealand’s fastest growing region

15 Auckland region – key financial and economic hub Key sectors – manufacturing – professional, scientific, technical services – retail trade – healthcare and social assistance – education and training – wholesale trade Contributes around 35% of New Zealand’s GDP

16 Issuer Manukau City Council Description Fixed Rate Secured Bonds Security First ranking charge over all rates and rates revenue of Manukau City Council Issue credit rating The Issuer does not intend to have the bonds rated however Auckland Council has applied to obtain a credit rating from one or more reputable international rating agencies. Issue amount Up to $250,000,000 with the right to accept up to a further $100,000,000 oversubscriptions Term Seven year maturity (29 September 2017) Use of proceeds The general financing requirements of the Existing Councils until 1 November 2010; and the general financing requirements of the Auckland Council after 1 November 2010. Some or all of the proceeds will be on lent to other councils in the region. Terms of the Bond Offer

17 Interest rate The Interest Rate will be set as the higher of: a) the Minimum Interest Rate; or b) the sum of the Swap Rate and the Issue Margin. Minimum Interest Rate and the Issue Margin will be advised by the issuer on its website at www.manukau.govt.nz under the “bond issue” link on that page on or before 1 September 2010 Interest payments Semi-annually in arrear on 29 March and 29 September. First interest payment date 29 March 2011 Unlisted The Bonds will not be listed on the Issue Date. However, Doug McKay, the interim Chief Executive of Auckland Council, has informed Manukau City Council that it is intended that Auckland Council will make application for the Bonds to be listed on the NZDX market as soon as practicable following 1 November 2010. The NZX is a registered exchange under the Securities Market Act 1988 Issue date 29 September 2010 Terms of the Bond Offer

18 Issue price $1.00 per bond Fees 0.50% Brokerage 0.25% Firm allocation fee Minimum subscription $5,000 plus multiples of $1,000 thereafter Interest on subscription Payable at the OCR and calculated on a daily basis Registrar Link Market Services Arrangers and Bookrunners ANZ National Bank Limited Craigs Investment Partners Limited Joint Lead Managers ANZ National Bank Limited Craigs Investment Partners Limited First NZ Capital Securities Limited Goldman Sachs & Partners New Zealand Limited Co-Manager Forsyth Barr Limited Terms of the Bond Offer

19 Timetable Offer launch date 24 August 2010 Firm bid due date By 11:00am, 31 August 2010 Issue margin and minimum interest rate set date 31 August 2010 Firm allocation notification On or before 1 September Offer opens 1 September 2010 Offer closes 3:00pm, 24 September 2010 Interest rate set date 27 September 2010 Issue date 29 September 2010

20 Key points Auckland region one of NZ’s key financial and economic hubs Auckland Council takes responsibility for Bonds issued under this Offer on 1 November 2010 Robust legislative structure and fiscal discipline will apply for Auckland Council Auckland Council has applied for an issuer credit rating Auckland Council intends to list bonds on NZDX post November 1 Opportunity to invest in Auckland infrastructure

21 This document does not constitute a recommendation by Manukau City Council (Issuer), ANZ National Bank Limited or Craigs Investment Partners Limited ( Arrangers, Bookrunners and Joint Lead Managers ), First NZ Capital Securities Limited, Goldman Sachs & Partners New Zealand Limited ( Joint Lead Managers ), Forsyth Barr Limited (Co-Manager), Trustees Executors Limited (Trustee) nor any of their respective directors, officers, employees or agents to subscribe for, or purchase, any of the Bonds. None of the Issuer, Arrangers, Joint Lead Managers, Co-Manager or the Trustee or any of their respective directors, officers, employees or agents accepts any liability whatsoever for any loss arising from this document or its contents or otherwise arising in connection with the Offer. Applications for the Bonds may only be made by completing and lodging the Application Form enclosed with the Investment Statement. The Investment Statement is an important document and should be read carefully. Investors should consider the risks that are associated with an investment in the Bonds, particularly with regard to their personal circumstances (including financial and tax issues). A summary of the principal risks associated with the Issuer and the Bonds are set out in the Investment Statement under the heading “ What are my risks? ”. This document does not constitute an offer of Bonds in any jurisdiction other than New Zealand or in other jurisdictions where the Bonds may be lawfully offered. No action has been taken by the Issuer which would permit an offer of Bonds, or possession or distribution of any offering material, in any country or jurisdiction where action for that purpose is required (other than New Zealand). No person may purchase, offer, sell, distribute or deliver the Bonds, or have in its possession, or distribute to any person, any offering material or any documents in connection with the Bonds in any jurisdiction other than in compliance with all applicable laws and regulations. The Bonds offered are debt securities and constitute secured, fixed rate debt obligations of the Issuer secured by a charge over all rates and rates revenue of Manukau City Council. The security is first ranking, except to the extent that other security is preferred by law (including security interests that may have priority under the Personal Property Securities Act). A detailed description of the security provided for the Bonds is contained in the Investment Statement. The Bonds will rank equally and without any preference among themselves and equally with all other secured indebtedness of the Issuer, except indebtedness preferred by law. Neither the redemption of, nor the payment of interest on, the Bonds is guaranteed by either the Crown, the Trustee or by any other person. To receive a copy of the Investment Statement relating to the Bonds please call ANZ National Bank Limited on 0800 269 476 Craigs Investment Partners Limited on 0508 266 266, First NZ Capital Securities Limited on 0800 005 678, Goldman Sachs & Partners New Zealand Limited on 0800 555 555 or Forsyth Barr Limited on 0800 367 227. Important notice


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