Contact launches $300m bond issue at 8pc

Contact Energy launched a $300 million bond issue offering an annual 8 per cent interest rate with the ability to accept unlimited oversubscriptions.

Contact chief executive David Baldwin said the company intended to use the funds raised to support its capital investment programme and for general operational purposes, and possibly to repay existing debt.

The capital investments included geothermal development near Taupo, new gas-fired peaking capacity at Stratford, and the country's first underground natural gas storage facility near Stratford.

"Contact Energy has some of the country's most important energy infrastructure projects under development. These projects will power the country's future and underpin Contact's long-term growth," Mr Baldwin said today.

Large bond offers are seen as attractive to investors following falls in bank term deposit rates. A Fonterra offer at the start of February was in heavy demand.

The minimum investment in the Contact Energy issue is $5000, with multiples of $1000 after that.

Contact said the unsecured, unsubordinated bonds would be issued for a term of five years, with maturity in May 2014, and had been assigned a credit rating of BBB by Standard & Poor's.

- NZPA