Insurance Australia Group Limited (IAG) is considering making an offer of up to NZ$150 million of unsecured subordinated bonds to the New Zealand public, with the option to accept oversubscriptions.

The issue would be part of the Group’s ongoing capital management programme, with net proceeds to be used for general corporate purposes.

It is expected the bonds would have a term to maturity of 25 years and be callable at IAG’s discretion on the fifth anniversary of their issue and on each interest payment date thereafter. Interest would be payable quarterly in arrears. 

An announcement of the margin and minimum interest rate (which will apply until the first call date) would be made on or around the opening of the offer, expected to be in November 2011.

IAG expects that the bonds would be assigned a credit rating of ‘A-’ by Standard & Poor’s.