Australia’s National Broadband Network (NBN) builder, NBN Co, has undertaken its inaugural finance raising effort in the United States capital markets, pricing a US$2 billion bond issue.
The issue was made up of a five-year bond of US$750 million and a 10-year bond of US$1.25 billion. The network builder said the five-year bond would mature in May 2026, while the 10-year bond is set to mature in May 2031.
NBN Co said the proceeds will be used for general corporate purposes, including the refinancing of NBN Co’s federal government loan and to fund future capital expenditure plans.
In November 2016, the federal government agreed to loan NBN Co the A$19.5 billion it needed at the time to ensure the completion of the project.
The move came after former NBN Co CEO Bill Morrow said the company was searching for private sector backers to make up the shortfall left by the government’s funding cap of A$29.5 billion which, according to budget papers, was on track to be tapped by the end of that financial year.
In May 2020, NBN Co revealed it had managed to source A$6.1 billion from Australian and international banks to give it extra “flexibility” amid the coronavirus pandemic and to refinance its debt. Of the A$6.1 billion, NBN Co was expected to draw down A$2 billion.
From the additional A$4.1 billion debt facilities, A$1.5 billion was to be reserved for working capital to provide the company with added flexibility and to support NBN Co’s long term capital management strategy. Some of that money was expected to be used to refinance the A$19.5 billion government loan.
In December last year, NBN Co managed to finalise a tranche of debt after successfully issuing a A$1.2 billion five-year benchmark transaction.
“The final order book comprised 55 high-quality investors, with strong participation from asset managers with domestic accounts dominating overall demand and representation within the order book,” NBN Co said at the time.
In its Corporate Plan 2021, NBN Co outlined its plans to refinance the remaining A$16.5 billion debt facility from the Australian Government with private debt by 30 June 2024.
Including the latest US bond effort, NBN Co has raised more than A$12 billion in new debt since March 2020, including A$8.5 billion in private bank debt and A$1.6 billion through five and ten-year domestic bonds.