tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, December 6th, 9:36AM

Investments

rss
Latest Headlines

Powerco bucks trend in securing bank debt

Electricity and gas lines company Powerco seemed to be bucking the trend when it announced it was replacing a maturing bond sold to retail investors with bank debt.

Wednesday, December 8th 2010, 10:29PM

by Jenny Ruth

It plans to use the $100 million five-year revolving cash facility provided by Westpac and ANZ Bank to redeem its $100 million in bonds maturing on March 29 next year.

A long line of other companies, such as Goodman Fielder, APN News & Media, TrustPower, Infratil and Greenstone Energy, have been lining up to sell bonds to retail investors to reduce their reliance on banks.

For similar reasons, others such as Vector have been tapping the offshore investor market.

Insiders report a determination among corporates to never again be as vulnerable to banks as they were when the global financial crisis (GFC) hit.

Many corporates have also complained that, at a time when they're looking to lengthen the maturity of their debt, banks are reluctant to lend for more than three-year terms.

Powerco chief financial officer Dennis Martin says he can "understand where the other companies are coming from."

However, Powerco already has a significant amount of US private placement debt as well as a considerable New Zealand bond program.

When it asked the banks to say what interest rates they would provide either three or five-year funding at, their offers proved competitive, Martin says.

Powerco's attributes as an essential utility certainly helped - the company is New Zealand's second largest electricity utility with about 420,000 customers connected to its networks throughout provincial North Island.

As well, "we have long-standing relationship with our bankers and they've been very supportive of us all through the GFC."

"If it was a larger amount we possibly would have gone offshore."

Powerco aims to have a diversified mix of debt, Martin says. In addition to the bonds it will redeem next year, it has $330 million in listed bonds maturing between September 2012 and September 2017.

In September next year, Powerco has between $250 million and $300 million of bank debt maturing and, although Powerco will assess its options at the time, including a retail bond issue, if market conditions are similar to today's conditions, the likelihood is that will be refinanced in the US private placement market, he says.

« Another finance company shuts up shopCapital + Merchant directors face SFO charges »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Today's Best Bank Rates
Rabobank 5.25  
Based on a $50,000 deposit
More Rates »
News Bites
Latest Comments
  • Partners kills its matrix
    “@Backstage, thanks. I agree there is no relationship to CoFI, though, from a service perspective, I have two other providers...”
    2 days ago by JPHale
  • Partners kills its matrix
    “Partners Life has decided to stop using its COM for advisers as it believes the system may breach the CoFI regulations which...”
    3 days ago by Amused
  • Partners kills its matrix
    “Insurance companies should stick to their lane. They are not advisers and even those that employ advisers should not be crossing...”
    3 days ago by Tash
  • [GRTV] The nitty gritty of Smart’s ETFs
    “Advisors should consider all gateways into investment markets including cheaply priced ETFs to provide access to low priced...”
    3 days ago by Pragmatic
  • DRS member or not - client care remains advisers’ responsibility
    “FAPs are members of DRS too. Substitute “adviser” for “FAP” and the story is actually a lot more accurate. If...”
    4 days ago by Aggressively_passive
Subscribe Now

Deposit Rates newsletter

Previous News

MORE NEWS»

Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com