- NBN Co was able to achieve a successful inaugural raise in US capital markets
- This brings NBN Co’s private debt raising to $12 billion, which already includes the AU$8.5 billion in private bank debt, as well as the AU$1.6 billion through five and ten-year domestic bonds.
- The company said that it intends to refinance the remainder of its AU$16.5 billion debt facility from the Australian Government with private debt by 30 June 2024.
NBN Co was able to achieve a successful inaugural raise in US capital markets. From there, the company was able to raise US$2 billion, which is approximately AU$2.6 billion.
The overall issue was composed of a five-year bond priced at US$750 million, along with a ten-year bond priced at US$1.25 billion. The former is set to mature in May 2026 while the latter’s maturity date is in May 2031. Upon the maturity date of both the five and ten-year bond, the capital, as well as the interest, should already be settled accordingly.
This brings NBN Co’s private debt raising to $12 billion, which already includes the AU$8.5 billion in private bank debt, as well as the AU$1.6 billion through five and ten-year domestic bonds.
The bond market, which is sometimes referred to as the debt market or credit market, is a financial market where participants can issue new debt. This new debt is known as the primary market while the buy and sell debt securities is known as the secondary market. The new debt is usually in the form of bonds, such as what NBN Co was able to acquire. However, the new debts may also include notes, bills, and others for public and private expenditures.
Through the bond market, the buying and selling of various debt instruments issued by a variety of entities transpire. More often than not, various corporations or even governments issue bonds in an attempt to raise debt capital. This capital can then be used to fund operations or invest in growth opportunities. In return, the original investment amount, plus interest, should be repaid.
Thus, in exchange for the capital that NBN Co borrowed, the latter will pay an interest coupon. This interest coupon is the annual interest rate paid on the bond. This is usually expressed as a percentage of the face value. NBN Co should pay the interest at predetermined intervals, which is usually annually, but sometimes it can also be semi-annually. NBN Co should return the principal on the maturity date or at the ending of the loan.
The company said that it intends to refinance the remainder of its AU$16.5 billion debt facility from the Australian Government with private debt by 30 June 2024.
According to NBN Co, the proceeds of what they have raised are set to be used for general corporate purposes, which include the refinancing of the company’s government debt and the funding of future CAPEX plans.
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