Vector may sell $150m of five-year bonds
Vector, New Zealand's No. 2 electricity and gas distributor, is weighing the sale of $150 million of five-year bonds.
Tuesday, March 24th 2009, 7:17AM
by Jonathan Underhill
The Auckland-based utility gave no further details. It would join companies including Contact Energy, Fonterra Cooperative and Auckland International Airport in tapping the debt market for funds.
Companies are taking advantage of investor demand for higher yields as deposit rates dwindle with the central bank's rate cuts. ANZ Bank is offering 3.5% on a two-year term deposit for amounts over $5,000. Bank of New Zealand offers just 2% and Kiwibank offers 5%, according to the Good Returns website.
Contact Energy pays annual interest of 8% on the five-year bonds it sold this month.
Vector repaid $560 million of debt in its first half and had a further $200 million due for repayment on March 4. It has renegotiated $275 million of bank facilities and secured a further $50 million.
The company has $307 million bonds maturing June 2012 that pay 8% interest.
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