Mercury Launches $250M Green Bond Offer to Refinance Debt and Fund Renewable Projects
Mercury launches $250 million green bond offer to fund renewable energy pipeline
Mercury NZ Limited has launched a retail green bond offer targeting up to $200 million, with capacity to accept $50 million in oversubscriptions. The 7-year unsecured, unsubordinated bonds are expected to mature on 1 April 2033 and carry an expected credit rating of BBB+ by S&P Global Ratings. The indicative issue margin range sits between 0.95% to 1.05% per annum.
The offer opened 23 March 2026 and is expected to close 25 March 2026, with the issue date set for 1 April 2026. Proceeds will refinance existing debt and be notionally allocated to eligible renewable projects under Mercury’s Green Financing Framework. The minimum application amount is $5,000, with increments of $1,000 thereafter.
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What are green bonds and why do they matter for investors?
Green bonds are fixed-income securities where proceeds are allocated to environmentally beneficial projects. Mercury’s Green Financing Framework ensures proceeds are notionally allocated to eligible wind and geothermal assets, certified by the Climate Bonds Initiative and aligned with Green Bond Principles.
Investors receive the same financial returns as conventional bonds, but with transparency on environmental use of proceeds. The Climate Bonds Initiative certification provides third-party verification of environmental integrity, appealing to investors seeking both income and alignment with sustainability goals.
The green bond process follows three steps:
- Issuer raises capital through bond issuance
- Proceeds allocated to eligible renewable energy projects
- Annual reporting on allocation and environmental impact
Mercury’s financial position and balance sheet discipline
Mercury maintains a Net Debt / EBITDA ratio of 2.2x as at HY26, within the target range of 2x to 3x consistent with its BBB+ credit rating. Liquidity headroom exceeds $350 million in cash and undrawn committed facilities as at 28 February 2026, providing buffer against market volatility.
The company prioritises Stay-In-Business CAPEX first, protecting asset availability and compliance. Growth CAPEX is discretionary and staged through investment gates to protect leverage. The Net Worth covenant requires a minimum of $500 million, with an interest cover covenant set at a minimum of 250%.
| Metric | Value |
|---|---|
| Net Debt / EBITDA | 2.2x |
| Target Range | 2x – 3x |
| Liquidity Headroom | >$350m |
| Net Worth Covenant | $500m minimum |
| Credit Rating | BBB+ |
Debt maturity profile supports refinancing strategy
The green bond proceeds will refinance existing debt, extending Mercury’s maturity profile. Upcoming maturities include $200 million in green bonds (September 2026), $200 million in green bonds (September 2027), and $150 million in green bonds (June 2028). The new bonds (MCY080) will mature 1 April 2033, adding a 7-year tenor to the debt ladder.
Proactive refinancing reduces rollover risk and demonstrates prudent treasury management, protecting bondholders from concentrated maturity dates.
Renewable generation pipeline underpins growth outlook
Mercury’s committed and in-progress renewable projects support its growth trajectory:
- OEC5 Geothermal (46MW / 390GWh): Commissioning commenced January 2026, delivered on time and on budget
- Kaiwera Downs Stage 2 Wind (155MW / 525GWh): First generation expected by May 2026
- Kaiwaikawe Wind (77MW / 221GWh): First generation expected by August 2026
The company targets adding approximately 3.5 TWh of renewable generation by 2030, with FY26 EBITDAF guidance of $1.0 billion. The proven delivery track record reduces execution risk for these capital-intensive projects.
Delivery track record builds investor confidence
Mercury has built 5 of the last 6 wind farms in New Zealand. OEC5 was delivered on time and on budget with zero serious harm over 650+ days and 280,000 hours worked. The Karapiro hydro rehabilitation was completed in 2025, informing future rehabilitation programmes.
Consistent on-time, on-budget delivery de-risks the forward pipeline and underpins the pathway to FY30 EBITDAF aspiration of $1.15 billion to $1.25 billion.
Key terms and how to apply
There is no public pool for the bonds. All green bonds are reserved for clients of Joint Lead Managers, institutional investors and primary market participants. Retail investors should contact a Joint Lead Manager or financial adviser to participate.
The minimum application amount is $5,000, with multiples of $1,000 thereafter. The NZX ticker code MCY080 is reserved for the green bonds, with expected quotation on 2 April 2026 on the NZX Debt Market.
Application process:
- Contact Joint Lead Manager or financial adviser
- Complete application during offer period
- Settlement expected 1 April 2026
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Investment thesis: Why Mercury’s green bonds may appeal to income investors
The investment case rests on four pillars. First, credit quality: Mercury is a BBB+ rated issuer with disciplined financial policy and leverage managed within the 2x to 3x target range. Second, renewable focus: proceeds support wind and geothermal assets with certified green credentials under the Climate Bonds Standard.
Third, proven execution: the company has demonstrated on-time, on-budget delivery of major projects including OEC5, Kaiwera Downs 2 and ongoing wind farm construction. Fourth, balance sheet strength: liquidity headroom exceeds $350 million and gated CAPEX approach protects bondholders from excessive leverage.
The 7-year term provides medium-duration exposure to a New Zealand utility with diversified renewable generation assets. The BBB+ rating offers attractive risk-adjusted income for investors seeking investment-grade bonds with ESG alignment.
Proven Delivery Track Record
Mercury has built 5 of the last 6 wind farms in New Zealand and delivered OEC5 geothermal expansion on time and on budget with zero serious harm over 650+ days.
Mercury’s $250 million green bond provides investors exposure to a BBB+ rated renewable energy company with a disciplined growth strategy. The expected quotation date is 2 April 2026, with the green financing framework providing transparency on use of proceeds through annual allocation and impact reporting.
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