Origin Energy to Cut Costs in Australia’s Biggest Loan This YearPaulina Duran
Origin Energy Ltd. is cutting borrowing costs by as much as 50 basis points as Australia’s largest electricity retailer markets the country’s biggest syndicated loan this year.
The company’s A$7.4 billion ($6.6 billion) facility includes a five-year loan paying 170 basis points more than the bank bill swap rate, according to two people familiar with the company’s financial arrangements. That compares with the 220 basis point margin it paid on a similar-maturity loan in October, data compiled by Bloomberg show.
Australia’s economic growth slowed for the fourth straight quarter in the first three months of the year, prompting Reserve Bank Governor Glenn Stevens to cut interest rates to record lows. The country’s companies paid on average 256 basis points to take out loans this year, down from 321 basis points in the same period in 2012, data compiled by Bloomberg show.
Origin’s financing terms reflect “the current scope and size of the business,” the Sydney-based company said in an exchange statement last week. Spokeswoman Anneliis Allen declined to comment on the financing details when contacted by phone today.
The company, which is rated BBB by Standard & Poor’s and Baa2 by Moody’s Investors Service, is paying 155 basis points more than the benchmark on the four-year portion of the loan, the people who spoke today said. That’s 45 basis points less than what it paid in October, Bloomberg-compiled data show.
Origin is offering incentive fees of between 50 to 65 basis points to lenders that commit at least A$250 million to the loan in early September and an extra fee if they pledge early in the month, the people said, asking not to be identified because the details are private. The facility is the largest one in Australia and New Zealand this year, according to data compiled by Bloomberg.
At least a A$2 billion one-year piece of that loan is slated to be refinanced in the capital markets, four separate people said earlier this week. Australia & New Zealand Banking Group Ltd., Bank of America Corp. Merrill Lynch, Goldman Sachs Group Inc., JPMorgan Chase & Co. and UBS AG, will retain that part of the loan, which has two options to be extended by the more years, the people said.