The BNZ will raise $425 million by issuing covered bonds to help meet new rules that require retail banks to draw on more long-term funding sources.
The first covered bond issued by an Australasian bank, it comprises $175 million worth of five-year bonds and $250 million worth of seven-year bonds.
BNZ says the issue will strengthen its financial position.
Covered bonds raise money against a pool of mortgages that are ring-fenced from other assets on the bank's balance sheet. Though banned in Australia, they're widely used in Europe.
