As per the media reports, the dividend rate by Rabobank was set yesterday, effectively an interest rate, on its $280 million Tier 1 capital raising in New Zealand.

The dividend rate for the securities was set at 8.7864 percent by Rabobank, which was 3.75 percent higher than the five year swap rate of 5.0364 percent.

As on 18th June, 2014, the dividend rate would be reset with the aim for further five year at the same margin over the five year swap rate at that time.

It has been learnt that the issue would most probably qualify under the Portfolio Investment Entity (PIE) regime. The issue also consists of preference shares.

Furthermore, the tax on dividends for retail buyers of Rabobank's PIE securities would be set 30 percent.

A source said that it is only the second New Zealand dollar Tier I capital offer with such tax benefits.

Apart from this, it is also the second time Rabobank has sold Tier 1 capital in New Zealand.