Spark considers $150 million, seven-year retail bond offer

Spark NZ [NZX: SPK], the country's biggest telecommunications company, may raise up to $150 million through a retail bond offer, joining a growing number corporates taking advantage of low interest rates to raise debt funding.

The Auckland-based company's Spark Finance subsidiary plans to make an offer of up to $100 million unsecured, unsubordinated seven-year bonds to institutional and retail investors, with oversubscriptions of up to $50 million, it said in a statement. Full details of the offer will probably be released in two weeks, and Spark Finance has appointed ANZ Bank New Zealand and Commonwealth Bank of Australia as joint lead managers, with Deutsche Craigs co-manager.

Spark didn't give any indication on potential pricing but the seven-year swap rate was recently at 3.315%, having declined from 4.03% at the start of the year.

The bond offer would follow other companies who have turned to the debt market to raise cash as interest rates remain low, including Auckland International Airport, SkyCity Entertainment Group, Contact Energy and Infratil.

Last month, AMP Capital Investors (New Zealand)'s head of fixed income and managing director, Grant Hassell, predicted more firms would return to the debt market where they could raise money cheaply.

In September, Spark beefed up its bank funding lines with a new $100 million facility with Westpac New Zealand, having ditched a near-identical facility with that bank in March.

The company scaled back plans for capital expenditure in the current year to about $380 million from the $576 million it spent in the year ended June 30, which included a $158 million price tag for an extra 700 megahertz radio spectrum.

Spark shares fell 1.8% to $3.20, and have increased 4.7% this year.

(BusinessDesk)

Paul McBeth
Tue, 17 Nov 2015

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Spark considers $150 million, seven-year retail bond offer