Contact Energy (ASX:CEN) has released the final terms sheet for its offer of NZ$350 million of unsecured, subordinated, redeemable, cumulative, interest-bearing green capital bonds, with a maturity date of 19 May 2057 and an issue price of NZ$1.00 per Capital Bond.

Key Points

  • Contact Energy is issuing NZ$350 million of green capital bonds maturing 19 May 2057, structured as unsecured, subordinated, cumulative, and interest-bearing securities.
  • The Capital Bonds are Green Debt Instruments certified by the Climate Bonds Initiative under Contact's Sustainable Finance Framework.
  • S&P Global Ratings has assigned an issuer credit rating of BBB (stable outlook) and an issue credit rating of BB+ to the Capital Bonds.
  • Contact has issued a redemption notice for its existing NZ$225 million CEN060 Bonds, which carry a 4.33% per annum interest rate, with redemption scheduled for 19 November 2026.
  • Expected initial quotation and trading on the NZX Debt Market is Friday, 20 November 2026.

Green Capital Bond Structure and Ranking

The Capital Bonds have a term of 30.5 years and will mature on 19 May 2057 if not redeemed before that date. They are unsecured and subordinated to all other indebtedness of Contact, except indebtedness expressed to rank equally with or subordinate to the Capital Bonds. The Capital Bonds will rank equally with Contact's existing NZ$250 million green capital bonds, which carry an interest rate of 5.67% per annum, have a final maturity of 3 October 2054, and are currently quoted on the NZX Debt Market under ticker code CEN090.

Use of Proceeds and CEN060 Bond Redemption

According to the filing, proceeds from the Capital Bonds will be used for the financing and refinancing of renewable generation and other eligible green assets in accordance with Contact's Sustainable Finance Framework. Contact expects to apply the net proceeds to repay existing debt, including the CEN060 Bonds. The first reset date for the CEN060 Bonds is 19 November 2026, and following completion of the Bookbuild process, Contact has issued a redemption notice to CEN060 Bondholders to redeem those bonds on that date.

Credit Ratings and S&P Equity Content

S&P Global Ratings has assigned the Capital Bonds an issue credit rating of BB+, two notches below Contact's issuer credit rating of BBB with a stable outlook. One notch is deducted for the subordinated nature of the Capital Bonds and a second notch because of the potential for interest payments to be deferred. S&P Global Ratings has also assigned an "intermediate" equity content to the Capital Bonds, under which the bonds are considered to comprise 50% equity when calculating financial ratios for Contact. This equity content is expected to fall to minimal, or 0%, on 19 May 2032.