Chorus launches bond issue to repay bank debt

Offer won't have a public pool.

Chorus [NZX: CNU] plans to raise as much as $400 million through a five-year bond issue to help repay $1.67 billion of bank debt.

It is joining a growing number of companies refinancing through the listed debt market.

The telecommunications network operator will sell $300 million of five-year, unsecured, unsubordinated fixed-rate bonds with oversubscriptions of up to another $100 million, it says. The proceeds will go towards repaying existing bank loans.

Chorus had bank debt of $1.67 billion at December 31, of which $450 million comes due in July of this year.

The company's effective interest rate was 6.9% in the year ended June 30, 2015, including a rate of 6.75% on £260 million of euro medium term notes.

The interest rate will be set by the company and joint lead managers ANZ and Westpac after holding a book build on April 13. No indicative price was set, but the five-year swap rate was recently at 2.53%, a near record-low.

The offer won't have a public pool and opens on April 14 and closes on May 4.

Chorus shares rose 0.3% to $4, and have gained 2.1% so far this year.