Origin Energy, one of the largest network companies currently operating in Australia, is looking to bring about a significant reduction in its borrowing costs (by about 50 basis points), as the company, which is the largest electricity retailer in Australia, looks to market the biggest syndicated loan for the country in this fiscal year. The 7.4 Billion AUD facility of the Origin Energy comes with a five year loan, which pays 170 basis points greater than the swap rate of the bank bill, as per the reports revealed by a couple of people who are quite familiar with the financial settlements of Origin Energy. This compares directly with the 220 basis point margin that the company paid on a similar kind of maturity loan. This was revealed by the data that was compiled by Bloomberg.
In the first quarter of this year, the economic growth of Australia had again slowed considerably, which meant that interest rates were cut down to record lows by the Reserve Bank Governor, Glenn Stevens. On an average basis, companies had to pay around 256 basis points this year in order to take out a loan. This was a stark drop from last year, in which year the averages stood at 321 basis points, as the data compiled by Bloomberg showed.
The company, which is based in Sydney, revealed an exchange statement this past week, showcasing the current scope and size of the business, by emphasizing on the financing terms of the company. When she was contacted by telecom today, Anneliis Allen, the official spokeswoman of Origin Energy refused to make any further comments on the details of the financing of this deal.
Origin Energy is rated BBB by Standard and Poor’s, while Moody’s Investor Services gives the company a Baa2. Those who spoke today revealed that the company was paying 155 basis points higher than what the benchmark was set on in the fourth year of their loan. As a result, the data revealed by Bloomberg showed that this was 45 basis points less than what the company paid back in October.
The incentive fee offered by Origin Energy is of around 50 to 65 basis points to lenders that are looking to pledge at least $250 million to the loan as early as September, while an extra fee has been set in place for those who are looking to commit in the early parts of the month. This was revealed by informers who preferred to keep their identity secret, since they wished to keep most of the details private. According to the data that was given by Bloomberg, this facility is of incomparable size in both Australia and New Zealand for this fiscal year. It is expected that at the very least, $2 billion one year piece of the sanctioned loan will be utilized in the capital markets (refinanced), as was reported by four separate individuals who wished to keep their details private. The situation of the Australian economy meanwhile, shows no signs of improvement.