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: Thursday, October 1st, 9:48PM

Investments

rss
Latest Headlines

S&P's view on Genesis's new bonds

Standard & Poor's has rated Genesis Energy's proposed 30-year capital bonds issue a “BB-” rating, three notches below what is usually regarded as investment grade.

Friday, April 8th 2011, 5:00AM

by Jenny Ruth

The bonds are intended to partly fund the acquisition of the Tekapo A and B hydro assets.

The international ratings agency rates Genesis itself "BBB+" but has it on negative watch.

"We classified the capital bonds as having a "high" equity content, meaning that we will treat the bonds entirely as "equity" and the coupon payments as "dividends" in our financial ratio calculations, says credit analyst Alicia Low.

Key features of the bonds include the mandatory deferral of coupon payments for up to five years if Genesis' rating falls to "BB+" or below. They will also rank behind all senior unsecured creditors including Genesis' existing retail bonds, medium-term notes and bank debt.

"Furthermore, the heightened risk of interest payment deferrals and deeply subordinated recovery position underpin our view of the four-notch differential between the 'BB-' rating on the capital bonds and Genesis Energy's stand-alone credit profile," Low says.
However, the mandatory deferral of interest payments "supports the issuer's credit quality because of the retention of cash in the company, which would have otherwise been used to pay interest on the capital bond."

« Outlook bleak for Allied FarmersSCF receivers sell major asset »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Today's Best Bank Rates
Heartland Bank 0.75  
Heartland Bank 0.75  
Rabobank 0.75  
Based on a $50,000 deposit
More Rates »
News Bites
Latest Comments
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
 
Site by Web Developer and eyelovedesign.com