Sharechat Logo

Wellington Airport falls short of target with $70 mln raised in latest bond offer

Wednesday 15th February 2017

Text too small?

Wellington International Airport, the Infratil-controlled capital city gateway, raised $70 million through a bond offer, falling short of its target and with the bulk winding up with one investor.

The airport operator sought $75 million from the bond issue with the capacity to accept oversubscriptions of up to $25 million for the notes which mature on June 16, 2025, paying annual interest of 5 percent. At the time of the offer, Wellington Airport negotiated a side deal with an institutional investor who had planned to subscribe to $50 million of unlisted wholesale bonds but instead subscribed to the retail offer for the same amount.

As part of that deal, Wellington Airport said it won't exercise a call option on the bonds without the institutional investor's consent and agreed to lift the coupon by 1 percentage point if the airport operator's credit rating falls to BB+ or lower. Standard & Poor's currently rates the airport's credit a BBB+ with a 'stable' outlook.

When the offer opened on Dec. 15, the bond's 5 percent coupon was 163 basis points above the eight-year swap rate, and that gap has now widened to 170 basis points with the rate at 3.3 percent.

ANZ was the sole manager of the latest offer, whereas the airport's previous retail bond issues had joint managers including Forsyth Barr, First NZ Capital and Westpac.

Low interest rates helped renew the attraction of the NZX's debt market for companies to raise funds last year, and the airport tapped that market two other times in 2016. It currently has four bonds listed on the NZX, and the latest offer will be allotted on Friday.

Those bonds include one $75 million tranche paying 6.25 percent maturing in May 2021 and another $75 million tranche paying 4.25 percent and maturing in May 2023, some $60 million of notes paying 4 percent and maturing in August 2024, and $59.1 million of debt paying 5 percent and coming due in June 2025.

Wellington Airport has been upgrading facilities, spending $73 million on a new domestic passenger terminal and upgrading its international terminal. Majority owner Infratil recently said it expects $90 million of capital expenditure in the current financial year, funded by recent bond issues, to improve passenger terminal services, a ground transport hub including 1,000 car parks, and a 134-room hotel.

The airport has also been advocating for an extension to its runway to make room for long-haul flights from Asia and the US. Infratil has been pushing for central and local government to foot most of the $350 million price tag, saying the project wasn't commercially viable on a standalone basis, but that the wider regional economy would be a beneficiary if it went ahead. The runway debate has attracted opposition from some quarters, which is expected to play out during Environment Court hearings in June.

As at Sept. 30, the airport had $350 million of bonds outstanding, including wholesale notes, and largely undrawn banking facilities of $100 million.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Volpara posts record sales in December quarter, on track to beat revenue expectations
FNZC cuts target price but maintains dividend hopes for Z Energy after downgrade
Michael Hill gives up on decade-long US experiment, new plan for Emma & Roe
Kathmandu tips first half profit to rise 20% on higher sales, wider margins
NZIBF praises concluded CPTPP negotiations
Kimbal Riley to take helm of Vista in April; Holdaway staying in charge of product
January 24th Morning Report
Second Mercury earnings upgrade as summer storms fill northern hydro storage
NZ dollar hits 4-month high as Trump announces US tariffs, raising spectre of protectionism
While you were sleeping: Wall St mixed, Netflix rallies

IRG See IRG research reports