Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Fletcher Building unveils $377m debt deal

Fletcher Building chief financial officer Bill Roest (R) with company chief executive Jonathan Ling. Roest said the company has enjoyed good support from the US private debt placement market. Photo / Steven McNicholl
Fletcher Building chief financial officer Bill Roest (R) with company chief executive Jonathan Ling. Roest said the company has enjoyed good support from the US private debt placement market. Photo / Steven McNicholl

Fletcher Building said it had raised US$300 million ($378m) in long-term debt through a private placement (USPP) with US debt investors.

The placement has two maturities of 10 and 12 years.

Proceeds have been used to repay borrowings drawn under Fletcher Building's principal bank facilities, Fletcher Building said in a statement.

The funds raised have been swapped into Australian dollars in a mix of fixed and floating interest rates. The company has previously accessed the USPP market for longer term funding.

"With the completion of this transaction we have been able to extend the debt maturity profile which suits the long-term nature of our business," Fletcher Building's chief financial officer Bill Roest said.

A handful of New Zealand corporates have successfully raised funds on the United States private placement market over the last year or so.

The USPP market is made up mainly of big insurance companies on the lending side, and utility-style companies on the borrowing side.

The attraction for insurers is that they can pick up interest rates well in excess of what can be achieved from their US treasury equivalents, which remain unusually low while the US government tries to stimulate activity.

Despite America's troubled economy, funds have continued to flow into pension funds and insurance schemes, but the investment alternatives for conservative insurers, who typically have longer-term investment horizons, have been limited because of depressed economic conditions in the US.

Fletcher Building shares last traded at $5.90, down from a high for the year of $9.52 last April.

- APNZ

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