NEW ZEALAND BUSINESS NEWS
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Kiwi Property Group Limited, one of the largest property companies listed on the New Zealand Stock Exchange, has closed its offer for seven-year fixed-rate senior secured green bonds after a bookbuild, allocating NZ$200 million of the bonds, including NZ$50 million of oversubscriptions, to participants and their clients. The company owns and manages mixed-use, retail and office buildings and is a member of the S&P/NZX 20 Index.
The margin has been set at 1.20 per cent per annum. The interest rate will be announced later today, along with the final terms sheet. The bonds are a form of borrowing secured against the company’s assets, which it is raising to fund its activities and stagger debt maturities.
The bookbuild drew total demand of $395 million at an issue margin of 1.20 per cent, which the company says represents about two times coverage of the offer size, including oversubscriptions. Demand came from both retail and institutional investors.
The offer had no public pool. All green bonds were allocated to clients of the joint lead managers, NZX participants and other approved financial intermediaries, so investors who wanted an allocation had to apply through one of those channels.
Craigs Investment Partners Limited acted as arranger and joint lead manager. The joint lead managers were ANZ Bank New Zealand Limited, also the green bond co-ordinator, Bank of New Zealand, and Forsyth Barr Capital Markets Limited.
S&P Global Ratings has confirmed it will assign the green bonds an issue credit rating of BBB+ upon issue. The company notes that a rating is not a recommendation by any rating organisation to buy, sell or hold Kiwi Property securities, and that its corporate credit rating is current as at the date of the announcement and may be suspended, revised or withdrawn at any time.
Chief Executive Officer Clive Mackenzie said: “We’re very pleased with the strong support from both retail and institutional investors for this green bond, which reflects the quality of our portfolio, including our newly-rated NABERSNZ shopping centre assets. The New Zealand debt capital markets remain an important part of our funding mix, helping us diversify our funding sources and lengthen our debt maturity profile on attractive terms.”
For a property company, the exercise is about how it funds buildings it holds long term. Borrowing for seven years at a fixed margin lets Kiwi Property lock in a cost of funds and push back the repayment date, rather than relying on shorter-term bank facilities.
The green label ties the borrowing to the environmental standing of the assets behind it. Mackenzie pointed to the company’s shopping centres rated under NABERSNZ, the New Zealand building energy rating tool, as part of what investors were buying into.
The two-times coverage figure matters most in the result. A bookbuild that fills at roughly double the amount sought tells the issuer it could have raised more, and tells the market that lenders were willing to accept the 1.20 per cent margin. For a business of this size, that gauges the price of long-dated debt in New Zealand at the moment.
Investors seeking more information are directed to contact their usual financial adviser. Further information about S&P Global Ratings’ credit rating scale is available at www.spglobal.com/ratings.
Source: NZX announcements
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