Investors pile into NBN $850m green bond
A rare corporate bond deal lit up the market on Wednesday as NBN Co tapped investors for a new five-year fixed-rate debt raising.
The government-owned broadband company launched a senior unsecured Australian-dollar green bond with an indicative yield of 5.3 per cent. Mizuho Bank, National Australia Bank, RBC Capital Markets and Westpac were mandated as joint lead managers.
NBN boss Stephen Rue. Alex Ellinghausen
The order book doubled from $535 million to more than $1.2 billion throughout the trading day, demonstrating the demand for high-grade Australian dollar corporate issuers. It closed at $850 million with a coupon of 5.2 per cent. The transaction was priced at a semi-quarterly coupon-matched asset swap plus 105 basis points. Investors were told the bond would settle on August 25.
NBN has an Aa3 (stable) rating from Moody’s and an AA (stable) Fitch rating.
The bond deal comes a week after NBN Co filed its annual results. The company delivered marginal revenue growth as it faces slow upgrades to fibre connections and declining satellite subscribers because of Elon Musk’s Starlink business taking regional customers.
NBN Co reported revenue of $5.27 billion, up 3 per cent over last year. Its earnings were $3.6 billion, up 15 per cent, with a net loss after tax of $1.1 billion, 24 per cent less than last year. Borrowing cost on its debt was a major contributor to the losses. NBN had $25.8 billion of debt at June 30, mostly from the private sector, and has slowly been replacing government debt with borrowings from the debt markets. There was $5.5 billion in government debt outstanding, due to be repaid in financial year 2024.
It raised more than $5 billion in bank and capital markets debt in financial year 2023,
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