While bond issues by banks often find their way into retail ownership, they are usually filtered down through institutions and brokers.

The ANZ issue is a full-blown retail issue with at least $125 million reserved for retail investors. A further $125 million is aimed at institutions and the bank will accept up to $50 million in over-subscriptions. Up to $25 million of the issue is reserved for ANZ shareholders and customers.

While the bank will market the issue itself, it has also taken on retail broking firm Forsyth Barr to help market the issue. The issue is also larger than usual to foster liquidity. National Bank, for example, has several bond issues in the market but the largest are $150 million.

Another unusual aspect is that the bonds will be listed on the Stock Exchange and tradeable through the scripless FASTER system.

"We’re trying to make them as marketable as possible," says acting treasurer Kevin Pulley.

Forsyth Barr head of fixed interest Max Brown says the ANZ issue sits well with the trend in recent years for retail investors to invest directly in fixed interest securities rather than through managed funds. Buying bonds directly also means a much more simple tax position for the retail investor, he says.

The bonds are rated "A+" by Standard & Poor’s making them among the best quality fixed interest securities available.

The interest rate will be set for five years when the offer closes (July 18 or earlier) at the 5-year swap rate plus a 30 basis point margin – if the swap rate was 7%, the bonds’ yield would be 7.3%.

The bonds will mature in July 2012 but ANZ can redeem them in July 2007. If ANZ doesn’t redeem them then, the interest rate will be reset at with an 80 point margin over the swap rate.