Meridian Energy details plans to raise as much as $150M of bonds

Tuesday 1st March 2016

Meridian Energy, New Zealand's largest hydro electricity generator and wind farm operator, plans to raise as much as $150 million of seven-year bonds, taking advantage of record low interest rates.

The Wellington-based company said the bonds would mature in March 2023 and will be offered at an indicative margin of 1.6 percent to 1.75 percent per annum over the comparable benchmark. The 7-year swap rate, a benchmark for corporate borrowing, was recently at a record low 2.8125 percent. The utility plans to sell the bonds to institutional and New Zealand retail investors, with the interest rate to be set following a bookbuild process on March 7.

Meridian joins other New Zealand corporates selling bonds at a time of low rates, including the country's biggest dairy exporter Fonterra Cooperative Group, the biggest telco company Spark New Zealand, and the busiest airport Auckland International Airport.

The energy company said the bonds would be quoted on the NZX debt market and have a long-term credit rating of BBB+ from Standard & Poor's.

Meridian had total borrowings of $1.2 billion at Dec. 31. Its last retail bond issue raised $200 million in 2010 and it said it will use proceeds from its 2016 retail bond issue to refinance an April 2016 US private placement maturity. Its next capital market maturity is a March 2017 $75 million retail bond.

Mr Brent King the Managing Director of Investment Advisory Firm Equity Investment Advisers Ltd commented “the markets remain liquid with strong demand for these bonds. Strong brands such as Fonterra and Meridian are attracting investor support. The markets seems to be believing that rates are locked into this range for the medium term at least. We have seen strong interest in both issues. "

BusinessDesk.co.nz

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