Sharechat Logo

MightyRiverPower's 2044 bonds deemed 'intermediate equity' by S&P, rated BB+

Monday 9th June 2014

Text too small?

MightyRiverPower's proposed issue of up to $300 million of July 2044 bonds has been rated BB+ and assessed as 'intermediate equity' by Standard & Poor's, meaning the ratings company will classify 50 percent of the interest paid as dividends.

The rating and classification come after S&P last year changed its criteria for assessing the equity content of hybrid instruments such as MightyRiverPower's subordinated capital bonds, which can be redeemed early and have interest payments deferred at the power company's discretion, and are subject to having their terms reset on July 11, 2019, and every five years thereafter.

The company's own credit rating is BBB+ and the rating on the bonds, which is below investment grade, reflects their subordination and interest deferred features, chair Joan Withers said in the prospectus.

The minimum interest rate for the first five years will be set via a bookbuild and is expected to be in a range of 6.8 percent to 7 percent. Funds raised will be used for general corporate purposes, repayment of bank debt and to extend the average term of the company's funding, it said. The offer will include a public pool, giving preference to existing shareholders in the event of scaling, MightyRiverPower said.

The company "believes that hybrid securities that are ascribed equity content such as the capital bonds are an effective capital management tool and intends to maintain such instruments as a key feature of its capital structure going forward," it said.

Forsyth Barr, ANZ New Zealand, Deutsche Craigs and Goldman Sachs are managing the sale. The offer opens on June 18 and closes July 8. The bonds are expected to be quoted on the NZX Debt Market from July 11.

The shares last traded unchanged at $2.26 and have gained 6.1 percent this year.

 

 

 

 

BusinessDesk.co.nz



  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:

Vector urges regulatory change in low-interest-rate environment
Vector urges regulatory change in low-interest-rate environment
Govt moves against surprise Supreme Court 'black hole' tax ruling
Qantas CFO Race Strauss to join A2 Milk as CFO
Climate Committee seeks data, evidence for future carbon budgets
Spark's wobbly world cup start raises stakes for live-streaming - analysts
An algorithm dunnit: anatomy of Spark's mid-match surrender
Stanley-Tallwood liquidator cuts deal over KiwiBuild development
Stanley-Tallwood liquidator cuts deal over KiwiBuild development
RBNZ expected to keep OCR at 1% but leave door open to more easing

IRG See IRG research reports