Auckland Airport to sell $150m retail bonds, completing funding for capital return

Auckland International Airport
Auckland International Airport 12-month price history (NZX.com)

Auckland International Airport [NZX: AIA], the nation's busiest gateway, plans to sell $150 million of seven-year bonds that will trade on the NZX, completing the long-term debt funding of last month's capital return.

A seven-year bond would mature in 2021, making it the longest maturity the airport company has listed on the NZX Debt Market and adding to its five existing exchange-traded debt securities. The issue would follow the sale of $150 million of floating rate notes to wholesale investors last month.

Auckland Airport cancelled one in 10 shares to return $454 million to shareholders, with initial funding from short-term bank facilities. At the time the capital return was announced last November, chairman Henry van der Heyden said the company's strong performance meant "we currently have a less efficient mix of equity and debt than we had in the past."

The company's debt to enterprise value following the cancellation at $3.43 a share, rose to 28.1 percent from 20.1 percent, while total debt rose to about $1.6 billion from $1.14 billion, according to Auckland Airport's presentation at the time the return was flagged last year. It expects to retain its A- debt rating with Standard & Poor's.

Full details of the bond offer will be released next week, the airport said in a statement.

Auckland Airport has $125 million of bonds with a coupon of 7 percent maturing on Nov. 27. Morgan De Campbell, the airport's treasury and investor relations specialist, told BusinessDesk no decision had been made yet about whether it would issue more bonds to replace the maturing debt.

The last time Auckland Airport sold seven-year bonds was in 2012 at a coupon of 4.7 percent. At the time, comparable New Zealand government seven-year bonds were at about 3 percent and were recently yielding 4.1 percent.

Shares in the NZX-listed airport fell 0.3 percent to $4.07 in morning trade, after reaching a record $4.15 last week, and have gained 27 percent in the past year.

(BusinessDesk)

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