Friday 7th June 2019
|Text too small?|
Mercury NZ plans to raise up to $300 million of subordinated capital bonds, which it will use to refinance an equal amount of listed debt currently paying 6.9 percent interest.
The electricity generator and retailer said it plans to sell the notes to retail and institutional investors and will release the details next week. It didn't give an indication on the maturity of the debt or an indicative interest rate.
The funds will go towards redeeming its existing $300 million of 2044 capital bonds, currently paying annual interest of 6.9 percent. That was a margin of 2.25 percentage points above the five-year swap rate at the time.
The interest rate on existing notes are scheduled to reset on July 11, but Mercury last month told holders it will redeem the bonds, which last traded at a yield of 3.8 percent, or $101.408 per $100 face value.
Under the terms of that offer, Mercury could seek new terms and conditions through an election process, but if that failed, the rate would be reset at the five-year swap, plus the margin and a step-up percentage of 0.25 percentage points.
At today's five-year swap rate of 1.525 percent, that would imply a reset rate of 4.025 percent. Without the step-up percentage, Mercury would be paying annual interest of about 3.775 percent.
NZX's debt market has been a popular way for listed issuers to raise funds over the past couple of years, with low interest rates around the world making it a cheap form of funding. Of the $5.84 billion of new capital raised on the NZX so far this year, some $4.37 billion has been in debt.
Mercury has hired Forsyth Barr as the proposed offer's arranger. The joint lead managers will be Bank of New Zealand, Deutsche Craigs, and Forsyth Barr.
The company's shares last traded at $3.885, and have gained 6.6 percent so far this year. In April, the company lowered its annual earnings forecast as dry weather in the central North Island sapped its hydro-generation.
No comments yet
Heavy lifting ahead for emissions partnership
SkyCity to start reopening this afternoon
Napier Port shares surge to 1/3 above August listing price on strong cargo volumes
Vital Healthcare gets a new manager, Aaron Hockly
Venture capital funding gap is real - David Parker
Serko brings in booking.com in $45m capital raising
Fonterra farmers urge MPs to unshackle cooperative
NZ dollar benefits as EU likely to grant Brexit extension
24th October 2019 Morning Report
OPINION: All the questions the convention centre fire asks