Opinion: Are Genesis Energy's capital bonds worth buying?
As far as Standard & Poor's is concerned, the bonds Genesis Energy is about to start selling on Friday are as near to equity as debt securities get.
Genesis wants to sell up to $275 million of the 30-year bonds to partly fund its $821 million purchase of the Tekapo A and B hydro stations from the also government-owned Meridian Energy. It will pay at least an 8.5% coupon for the first five years, after which it will be reset.
S&P has rated the bonds "BB-" compared with Genesis Energy's own "BBB+" rating with a negative outlook.
John Kidd at McDouall Stuart reckons the bonds, which will be listed on NZX, will be popular, despite their S&P's view of their equity characteristics.
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