Rates round-up: August 26

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Works Finance to repay bonds; Transpower to sell $300m bonds; Local government bonds popular.

Sunday, August 26th 2012, 6:00AM

by Niko Kloeten

State-owned national grid operator Transpower New Zealand has announced it will sell up to $300 million of bonds.

The offer is for $200 million of unsecured, unsubordinated bonds with up to $100 million of over-subscriptions; Transpower said the money would be used for working capital and to help fund its network upgrade.

There will be two tranches, with floating interest rate issue that will mature in December 2015 and a fixed-rate issue that will mature in September 2019, it said.

The debt will have an AA- credit rating with Standard & Poor’s and the interest rates will be announced following a bookbuild on August 31.

ANZ and BNZ are the joint lead managers for the sale

Transpower recently reported to $84.8 million profit for the year ended June 30, up from $78.5 million a year earlier; it will pay a $205 million final dividend.

Works Finance to repay bonds

Investors in $150 million of Works Finance bonds are about to get their money back, with the company announcing it will repay the three-year bonds on schedule in September.

Works Finance, a subsidiary of infrastructure firm Downer Edi, issued the fixed-rate unsecured unsubordinated bonds at 9.65% per year in 2009.

The company announced last week that repayment of the bonds will be made to holders as at September 5.

Trading in the bonds, WKS020, will be halted at market close this Friday, August 31 until the maturity date of Saturday September 15.

WKS020 will cease quotation on NZDX on Monday, 17 September 2012.

Local government bonds popular

Bonds issued by the new Local Government Funding Agency are continuing to attract strong interest, with the latest offer heavily oversubscribed.

The offer of $75 million of bonds maturing in 2019 attracted $245 million of bids, for a bid cover ratio of 3.3.

With a coupon rate of 5.00% the bonds had an average successful yield of 4.23%, about 90 basis points above the equivalent New Zealand Government bonds.

Meanwhile, New Zealand Government bonds have continued to sell well, with yields falling slightly.

Its issue of $100 million of 2015 bonds at a coupon rate of 6.00% attracted $210 million of bids with an average successful yield of 2.67%.

The 2023 issue was even more heavily oversubscribed, with $574 million bid for the $150 million issue, which had a coupon rate of 5.50% and an average successful yield of 3.78%.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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