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BusinessDesk: Transpower launches $200 million bond offer

Bonds
BusinessDesk: Transpower launches $200 million bond offer
18th Nov 11, 2:33pm by BusinessDesk

Transpower New Zealand, owner and operator of the national power grid, is making an offer of up to $200 million of unsecured, unsubordinated bonds.

The announcement comes after Transpower chairman Mark Verbiest said yesterday the state-owned enterprise must raise $3 billion of debt over the next five years, some of which would have to come from the domestic market.

The bonds are being offered with terms to maturity of four years (floating rate notes) and seven years (fixed rate notes), at the company’s discretion.

It expects bonds will be assigned a credit rating of AA- by Standard & Poor’s and A1 by Moody’s.

Announcements on interest rates and issue margins are expected on Nov. 25.

(BusinessDesk)

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2 Comments

by  Stephen Hulme  |  20th Nov 11, 3:47pm 1321757234

It's billions of new debt here and there all rhe time - we only have 1.8 million workers and a significant proportion of those are tax eaters.

Why are we collectively seeking self destruction?  

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by  Stephen Hulme  |  21st Nov 11, 10:09am 1321823381

Hi Iain

SOE's have no explicit government guarantee, they stand as does any commercial enterprise. The SOE minister is just the sole ahareholder. They are already partially privatised.

Local banks always monetise government bond issuance within each sovereign jurisdiction. USD remain in New York as NZD remain in Wellington.

Primary dealers are bound by complex laws binding them to bid on average at each tender and or auction by the government and not all are banks.

Foreign  participation is achieved by extending their creditworthiness to NZ for instance. Our local banks extend a credit line to allow for local settlement of bond purchases by them and hence the debt is monetised locally.

The term for this operation is generally known as 'credit wrapping'. Uridashi bond issuance was another form, whereby the World Bank and other suprenational entities undertook this function by issuing debt in NZD using their superior credit rating.

Government bond issuance is not the same as commercial bond issuance. The later is not generally monetised by our banks in the first instance - underwritters seek to source the funding from the sale of existing investments by investors. And yet if there is a short fall of secondary sales to meet demand I am sure the underwritters have contingent bank credit lines to finalise the issuance.  

The banks' reserve capital retention laws are not as favourable to commercial loans as they are to government debt loans - the latter attracts zero capital requirement.     

 

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