Air NZ prices unrated 5-yr bonds at 6.9%, as $150M snapped up without public sale
Sept. 2 (BusinessDesk) – Air New Zealand Ltd.’s $150 million of unrated five-year bonds were snapped up by institutions and market participants, leaving none for the general public. They pay 6.9% annual interest.
The offer “has been fully allocated on a firm allocations basis to primary market participants and institutional investors,” the airline said in a statement.
The national airline, which is three-quarters owned by the government, was placed to professional investors at a time the five-year swap rate, a benchmark for pricing corporate debt, has widened out to nearly 50 basis points above government bonds from just 8 basis points on April 19.
The airline hired First NZ Capital Securities and Craigs Investment Partners as lead managers, supported by Bank of New Zealand and Forsyth Barr.
The bonds are priced about 90 basis points above term deposits of similar maturity with investment grade credit ratings. Shares of listed companies including Vector Ltd. offer dividend yields of around 8% currently.
A priority pool of $4 million of Air New Zealand bonds is still on offer to NZ-resident shareholders and employees, the airline said. The bonds are to trade on the NZDX market.