TrustPower plans bond issue

TrustPower is planning to sell up to $200 million in subordinated retail bonds which will be stock exchange-listed.

Wednesday, 4 July 2012

by Jenny Ruth

The issue will refinance some existing bonds as well as being used "for general corporate purposes."

Up to $75 million of the offer will be a replacement for the $108.6 million in subordinated bonds maturing on September 15. TrustPower intends to redeem all these bonds for cash and will make the payment on September 14 as the following day is a Saturday.

The rest of the offer will be up to $75 million offered to the general public with an option to accept up to a further $50 million of oversubscriptions at TrustPower's discretion.

TrustPower didn't say what the term of the new bonds will be.

It is seeking preliminary indications of interest from holders of the 2012 bonds and other investors and expects to release full details and a prospectus on August 6.

The maturing bonds have an 8.5% coupon but it is unlikely in today's market TrustPower will need to offer that much for the new issue.

Lines company Vector's $307.2 million roll-over of capital bonds were issued in mid-June with a 7% coupon for a five-year term but are now trading at 6.05% or $104.454 per $100 face value. Given the higher ranking of the Vector bonds, it's likely the TrustPower bonds will trade at a higher interest rate.

Broking firm Forsyth Bar is arranging the issue.

TrustPower has two other subordinated bond issues and three senior bond issues.

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