Contact Energy plans to sell up to $125M of six-year bonds

Monday 24th August 2015

Contact Energy, which generates about a quarter of New Zealand's electricity, plans to sell as much as $125 million of six year bonds in the final step of its refinancing programme.

The Wellington based company will offer $100 million of unsecured, unsubordinated, fixed-rate bonds to institutional investors and New Zealand retail investors, with the potential for a further $25 million in oversubscriptions, it said in a statement. There will be no public pool for the bonds.

Contact has been refinancing over the last few years, spreading out the maturity profile of its debt to mitigate against any material requirements in any one year, diversifying its funding sources across multiple debt markets and adding flexibility and capacity in its banking facilities. This upcoming bond offer is the final step in its refinancing, and means its next capital markets maturity will be a $100 million wholesale bond in April 2017.

The company said the net interest rate on its borrowings has decreased to 5.9 percent in the 2015 financial year, from 6.5 percent in 2014.

The latest bonds will have an indicative issue margin of 1.15 percent to 1.2 percent per annum, which will be set along with the interest rate following a bookbuild on Aug. 28.

The bonds are expected to be issued on Sept. 4, with a maturity date of Nov. 15, 2021, and will be listed on the NZX debt market.

ANZ Bank New Zealand is the lead manager of the offer, and Forsyth Barr is the co-manager.

Contact's $222 million bonds maturing on May 15, 2019, which have a fixed interest rate of 5.8 percent per annum, last traded at $1.066 per $1 bond, or a yield of 3.95 percent.

BusinessDesk.co.nz

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