Kiwibank yesterday evening alerted debt investors it "cannot proceed with the settlement" of a A$175 million, ten year bond priced (as in 'agreed') only last week.Maybe the bank meant they simply "no longer want to borrow", or, a more drastic view, "cannot borrow" without the recently removed New Zealand government guarantee.Whatever the rationale, it was too compromising for anyone at Kiwibank to explain to either it's adviser ANZ or the bank's investors, let alone clarify anything for Banking Day.This episode casts the spotlight on a little scrutinised bank with an abundance of operational risks to manage.ANZ's debt origination team, via email, wrote that it "regretfully announces it has been advised by Kiwibank Limited that they cannot proceed with the settlement of the AUD175MM 4.50% 15 March 2027 (ISIN: AU3CB0243202) issue which was priced on the 7th March 2017."Settlement on this new bond "was scheduled to take place on the 15th March 2017", that is, today, "but will now not take place," ANZ said. ANZ was the sole lead manager on the bond.ANZ added: "Regrettably, no further information is forthcoming at this stage."Bond market newsletter the DCM Review on Monday reported that "newly lacking a guarantee from New Zealand Post, Kiwibank (rated A by Standard & Poor's) raised A$175 million for ten years, paying 162 basis pointed over swap. The bonds carried a yield 4.575 per cent, per annum.Banking Day contacted Kiwibank, but the only response was a statement from a media adviser that: "we have no comment; it's business confidential."The Reserve Bank of New Zealand also declined to comment on the "prudential matters of individual banks."The failure by a bank counterparty in Australia or New Zealand to proceed and borrow, from debt investors, the wholesale funds it solicited only days earlier is a rare event in the debt capital market.Fitch Ratings (which has a senior unsecured long-term rating of AA- on Kiwibank) said in a note last week "these notes are Kiwibank's first instruments issued since the removal of New Zealand Post's guarantee on 1 March 2017. "The notes are marketed to Australian and Asian institutional investors."Kiwi Group Holdings, which includes Kiwibank, Kiwi Wealth, Kiwi Insurance and New Zealand Home Loans, late last month reported a net profit of NZ$65 million for the half year to December 2016, down from NZ$73 million for the same period in 2015.Paul Brock is the chief executive of Kiwibank, a post he's officially held since 2010, when he replaced Sam Knowles. The NZ Post website touts him as "part of the team that created Kiwibank in 2002" and he has held several senior roles at the bank. Once wholly owned by New Zealand Post (and thus a public sector entity), Kiwi Group Holdings and Kiwibank now have three government entity shareholders: New Zealand Post, which retained 53 per cent; New Zealand Super Fund, 25 per cent and ACC, the Accident Compensation Corporation, with 22 per cent.The New Zealand government first announced plans to restructure the ownership of Kiwibank in April 2016 and the change