Westpac New Zealand Economic and Sustainability Strategy Update
Covered bond programme features¹
Structure
Security
Overcollateralisation
Asset Monitor
Hedging
Regulatory Support
Covered Bonds are issued by Westpac Securities NZ Limited, and guaranteed by WNZL (AA-/A1/A+ from S&P/Moody's/Fitch), backed by an
unconditional and irrevocable guarantee by the Covered Bond Guarantor (Westpac NZ Covered Bond Limited), which is limited in recourse to its assets
Security comprises a high-quality pool of first ranking, prime New Zealand residential mortgages which meet the eligibility criteria (the cover pool).
Mortgages in the cover pool are sold to the Covered Bond Guarantor to ensure that covered bondholders have a priority claim over the cover pool in the
event of issuer insolvency
Prior to service of a Notice to Pay on the Covered Bond Guarantor, an Asset Coverage Test is run monthly to ensure the Covered Bond Guarantor has
sufficient assets to support the outstanding Covered Bonds, plus overcollateralisation set by the ratings agencies (subject to a minimum documented
over-collateralisation level of approximately 11% (i.e. an Asset Percentage of 90%)
Following service of a Notice to Pay on the Covered Bond Guarantor, an Amortisation Test is run monthly to ensure the Covered Bond Guarantor has
sufficient assets to meet the Covered Bond obligations
PricewaterhouseCoopers has been appointed to monitor the calculation of the Asset Coverage Test and the Amortisation Test on at least an annual
basis
The Interest Rate Swaps and Covered Bond Swaps are used to hedge any exposure of the Covered Bond Guarantor to interest rate and currency risks
The RBNZ permits Covered Bonds as repo eligible instruments under legislation passed in December 2013 relating to covered bonds. The RBNZ has
set a limit of 10% of total assets of an issuing bank (calculated by reference to the value of assets encumbered for the benefit of covered bondholders)
1 Investors in WSNZL Covered Bonds should read the Prospectus dated 17 December 2020, as supplemented.
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