StockCo, a New Zealand agriculture finance business, has raised $30 million via the issue of October 2022 subordinated notes securities. It joins a growing number of companies without credit ratings which have raised funds by issuing high yield bonds in Australia. As interest rates have fallen, some investors have been willing to take on more risk in exchange for a higher rate of interest. This latest bond issue has come at a time when investors are hard-pressed to find yields which will satisfy their income requirements.
StockCo’s notes have an 8.75% coupon which is within the 7.50% – 9.00% range established over the last two years by similar unrated issuers. The notes are callable by StockCo on interest payment dates in 2019 at $103, 2020 at $101.50 and 2021 at par ($100) and a 0.75% step-up will apply if not called by October 2021. The proceeds from the notes’ sale will be used for working capital as StockCo expands its Australian operations.