Contact Energy considers $100m bond offer

Te Mihi, contact Energy's geothermal power station in Wairakei. Photo / Supplied

Contact Energy, which last year said it would focus on reducing debt, is considering a $100 million offer of bonds it plans to list on the NZX debt market.

Wellington-based Contact plans to sell $75m of unsecured, unsubordinated five-year bonds to institutional and retail investors, with oversubscriptions of up to $25m, it said in a statement. Details for the offer will be released next week.

New Zealand's five-year swap rate fell 9 basis points to 2.96 per cent, while Contact shares were recently unchanged at $4.78.

Forsyth Barr and Westpac Banking Corp have been appointed joint lead managers and Deutsche Craigs as co-manager.

Last October, Contact chairman Ralph Norris told shareholders the electricity generator and retailer would focus on repaying debt over the next 12-to-18 months, having returned about $847m to shareholders in the two prior years.

The power company has two tranches of listed debt on the NZX, with $150m of bonds paying a coupon 4.4 per cent maturing in November 2021 and $222m of notes paying annual interest of 5.8 per cent maturing in May 2019. The 2021 notes recently traded at a yield of 4.37 per cent and the 2019 bonds were recently at 3.58 per cent.