Australia’s United Energy raises US$435 mln bond

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SYDNEY, May 4 (BestGrowthStock) – Electricity firm United Energy
Distribution (EAD) is set to raise US$435 million in a U.S.
private placement bond issue to refinance debt maturing in
2011, it said.

The issue consisted of US$70 million four-year unsecured
notes and US$365 million in seven-year unsecured notes, it
said.

Both tranches paid the same margin of 155 basis points
(bps) over U.S. Treasuries, according to a source who has seen
the terms.

The borrower will pay an additional 25 basis points premium
for a six-month payment deferral, bringing the margin total to
180 bps, the source said.

Such premiums are common and allows borrowers who do not
immediately need the funds to lock in rates now in anticipation
of higher interest rates later in the year.

The United Energy issue will settle in October and was
increased from its original target size, the company said.

Preliminary discussions indicated a bond issue of US$250
million.

ANZ, JPMorgan, Westpac Institutional Bank and Bank of
America jointly lead the offer, the source said.

The U.S. private placement market has been a popular source
of funds for Australian companies looking for long-dated debt,
with 10 companies raising around US$3 billion there in 2009,
according to Reuters data.

Typical buyers of U.S. traditional private placements are
“buy and hold” U.S. insurance companies keen on long-dated
paper to match their assets.

United Energy is the third Australian firm to tap the U.S.
private market this year, following Envestra (ENV.AX: ) and
ElectraNet. Analysts expect a healthy pipeline of similar
offers from Australia in an effort to diversify their funding.

Leighton Holdings Ltd (LEI.AX: ), Australia’s top engineering
contractor, is also considering raising debt there. See
[ID:nSGE64308R].

UED is an electricity distributor in Melbourne, Australia’s
second largest city. It is rated BBB by S&P and Baa2 by
Moody’s.

In 2003, it raised US$460 million of 2011 and 2016 144a
bonds.

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(Reporting by Cecile Lefort)

Australia’s United Energy raises US$435 mln bond