Rates round-up
Contact’s proposed fixed bonds rated
Standard & Poor’s has assigned its BBB rating to the fixed-rate bonds to be issued by Contact Energy.
Proceeds from the bond issue will be used to fund Contact’s increasing capital-expenditure program.
S&P said Contact’s ratings were not immediately affected by the company’s substantial forecast earnings decline, due to “significant headroom in the company’s financial profile at the BBB rating. Furthermore, Standard & Poor’s believes that the unusual combination of poor North Island and strong South Island hydrology – which led to electricity price separation that, in turn, is driving the lower earnings – is unlikely to be sustained”.
Since Contact’s fixed bond rating was assigned, the company has posted a 79% slump in first-half profit.
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