There are a diminishing number of notes and corporate bonds listed on the ASX. In recent years, companies have had a tendency to raise funds via capital notes, which are the offspring of converting preference shares which began to emerge in the 1990s. As far as local companies are concerned, raising funds via listed-bonds has become unfashionable in Australia.
Soon there will be one fewer ASX-listed note. In a notice to the ASX, APA Group said its subsidiary APT Pipelines intends to redeem all of its ASX-listed subordinated notes (ASX code: AQHHA) on 31 March 2017. (Ed: 31 March is a Saturday and the following weekday is Easter Monday. Payment will take place on 3 April.)
APT Pipeline Notes were issued in September 2012 and they pay a floating rate of interest equivalent to 3 month BBSW + 450bps. The first call date is on 31 March 2018 and, if the redemption notice had not been lodged, the final maturity date was on 30 September 2072.
The redemption will be funded by a $500 million rights issue of ordinary shares which was announced on the day as the redemption notice.
Holders who are on the register on 23 March 2018 will receive $100 plus $1.551 interest per note. Trading of the notes on the ASX will cease at the close of business on 21 March 2018.
The announcement of APT’s intention to redeem was expected and it had little effect on the notes’ yield. At the closing price of $101.00, the internal rate of return (IRR) was just under 4.2% before transaction costs.