The New South Wales government is attempting to ramp up interest in its stalled Waratah Annuity Bond by announcing an exclusive distribution deal with Colonial First State’s FirstWrap investment platform.
The move comes after the first instalments of the bonds, aimed at “Mum and Dad” retail investors, failed to find traction in the market and reaped a disappointing $20 million.
When the Waratahs were launched, the NSW government said it was hoping to raise as much as $300 million through the process as a way of helping finance infrastructure projects. However, Treasurer Mike Baird recently said he was expecting $200 million over four years.
Fixed-income experts say the bonds have struggled because, with the three-year bond delivering an annual yield of 4.25 per cent and the ten-year 5.1 per cent, investors are still opting for term deposits in preference or lower rated, but higher returning bonds from other state and territory governments.
A $30-billion infrastructure plan for NSW was announced last week, targeting 70 projects over the next 20 years. Proceeds from the Waratah bonds will be deposited into the Restart NSW Fund.
Announcing the Colonial First State deal, Baird described the deal as a “win-win partnership” which would provide “income and peace of mind to investors at a time of ongoing economic uncertainty.”
Colonial First State group executive for wealth management, Annabel Spring, said offering the Waratah product fulfilled a need for FirstWrap to investors “seeking a longer term solution.”