Telstra expects to raise $200-$300m in NZ papers, may issue bonds

By NZPA

Wednesday 4th September 2002

Telstra Corp, the Australian parent of New Zealand's TelstraClear, took its first step into the local debt market today, announcing plans for a commercial paper programme that may be followed by a bond issue.

The unlimited New Zealand dollar-denominated commercial paper programme will go at least in part towards Telstra's 58 percent-owned subsidiary TelstraClear, which recently refinanced its $NZ600 million debt facility with Telstra.

Telstra corporate treasurer Cliff Davis said the move was made after a good look at the New Zealand market.

"We have quite a sizable requirement there so we're looking to fund that directly in the New Zealand market. It looks to us to be a very efficient market and we're hoping the investors there will find Telstra papers of interest to them."

Telstra said it will let the market to dictate what level the commercial papers will raise. But based on his research, Mr Davis said he estimated it could reach a couple of hundred million dollars.

"We've seen a number of programmes that are out there, and most of them seem to settle in the continued issuance level of around about $NZ200-$300 (million) of the bigger ones. So if that's where the comfort level is, then we will be quite happy to run it up to that level."

The commercial paper issue will be roadshowed later this month, or in early October, with the dealer panel comprising of ANZ Bank, Bank of New Zealand and WestpacTrust, Telstra said. ANZ is arranging the issue.

Mr Davis said the flexible, short-term nature of commercial paper was a good way to test the waters of the local debt market. If the issue was successful, a New Zealand dollar-denominated bond issue, probably with a five-year maturity, would likely follow.

"We'll get this one launched... then have a look at the bond issue opportunities and could well look at doing a bond issue by the close of the year if it all goes smoothly," Mr Davis told Reuters.

"I would envisage a bond issue of a couple of hundred million (NZ dollars) if the market is firm enough -- that would be quite a reasonable size for us."

Telstra has raised just over $A2 billion ($NZ2.37 billion ) of the $A2-$A2.5 billion it estimated it would need this calendar year through a 200 million sterling issue, a $US500 million global bond issue and a $A500 million domestic bond issue.

Including a planned issue of around $A300 million targeted at Japanese retail investors, a New Zealand issue would take Telstra to around $A2.5 billion in total debt issues this year, Mr Davis said.

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