Ausnet Services launches hybrid SGD bonds, mid-5% area

AUSNET Services on Monday is selling long tenure hybrid Singapore dollar (SGD) bonds and the initial price guidance is mid-5 per cent area.

The bonds have a tenure of 60.5 NC or non call 5.5. That means the debt matures in September 2076 but they can also be called or redeemed by the issuer in September 2021.

The bonds have perpetual like features but is dated due to Australian tax rules on interest for undated issues.

It's effectively a subordinated perpetual callable after five years, said Terence Lin, assistant director, bonds and portfolio management, fixed income division, iFAST Corporation.

Currently listed on both the Australian and Singapore stock exchanges, AusNet Services (formerly known as SP Ausnet) is in the business of energy transmission, and is the largest energy delivery services business operating in the Australian state of Victoria.

AusNet owns and operates electricity transmission and distribution networks as well as gas distribution assets, servicing more than a million industrial and domestic customers in Victoria.

It's a sterling investment grade deal with strong shareholders, said Clifford Lee, DBS Bank head of fixed income. "It's a strong credit to test out the market, it's as strong as it gets," he added.

Singapore Power and the State Grid Corp of China are the largest shareholders of AusNet Services (at 30.48 per cent and 19.5 per cent, respectively).

Singapore Power is wholly owned by Temasek Holdings and the State Grid Corp of China is China's largest state-owned power generation firm, and ranks amongst the largest utility companies in the world.

DBS and HSBC are joint bookrunners.