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Fletcher Building Launches Sale Of Capital Notes

Fuseworks Media
Fuseworks Media

Wellington, Nov 24 NZPA - Fletcher Building is raising up to $200 million by selling capital notes, after criticising the Government for making borrowing by corporates difficult.

Fletcher Building Finance is selling $100m of capital notes with the ability to accept $100m in oversubscriptions. They are five- and seven-year notes maturing in May 2014 and May 2016.

The capital notes are unsecured, subordinated debt of Fletcher Building Finance and are guaranteed on an unsecured, subordinated basis by Fletcher Building Ltd.

They initially pay 9 percent per annum.

The money raised is being used for the general business operations of the Fletcher Building and retirement of debt. The company has an existing debt issuance programme.

The sale comes at a time when investors have been looking to lock in high interest rates by purchasing fixed interest instruments such as capital notes and bonds.

The sale also comes soon after Fletcher Building chairman Roderick Deane told shareholders at the annual meeting that the Government's deposit guarantee scheme left question marks over the role and competitiveness of the previously highly efficient corporate bond market.

"Many corporate bonds have risk profiles and interest rates which sit between those of banks and finance companies but that profile has now been distorted," he said at the annual meeting this month.

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