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Transpower seeks up to $125 mln in new bond ahead of November maturity

Monday 26th February 2018

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State-owned national grid operator Transpower is seeking up to $125 million through the sale of a new bond ahead of a $325 million maturity later this year. 

The Wellington-based state-owned enterprise is selling up to $75 million of seven-year bonds with oversubscriptions of up to $25 million, with the proceeds set aside for general corporate purposes, it said in a statement. The indicative margin for the bonds is 0.85 percent to 0.95 percent, implying they'll pay annual interest of between 3.8 percent and 3.9 percent based on the current seven-year swap rate of 2.95 percent. 

The sale of unsecured, unsubordinated fixed rate bonds won't have a public pool with 100 percent reserved for Westpac Banking Corp customers. Westpac is the lead manager for the offer's details are expected to be finalised after a bookbuild on Feb. 28 and the bonds to be issued on March 6. 

Transpower has a $325 million of NZX listed bonds maturing on Nov. 30, followed by $700 million of debt due in the 2020 financial year. Its capital spending programme is expected to average $260 million over the next three years, investor presentation slides for the bond offer show. 

Last week, the company reported a 24 percent decline in first-half profit to $125.3 million due largely to a smaller unrealised gain in the value of financial instruments. Underlying earnings rose 18 percent to $120.3 million on a 5 percent gain in revenue to $552.8 million, underpinned by an increase in regulated transmission revenue. 

The board, chaired by Tony Ryall, declared an unchanged interim dividend of $66 million


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