Contact Energy opens a NZ$225 million green Capital Bond offer
Contact Energy Limited opened an offer on 2 November 2026 of up to NZ$225 million (with oversubscriptions accepted at Contact’s discretion) of unsecured, subordinated, redeemable, cumulative, interest-bearing green capital bonds (Capital Bonds). The offer is directed to New Zealand retail and institutional investors.
The offer is expected to close at 11.00am on 5 November 2026, and it is not underwritten.
There is no public pool. All Capital Bonds are reserved for clients of the Joint Lead Managers, institutional investors and other primary market participants invited to participate in the bookbuild.
If the bookbuild succeeds, the offer also refinances existing green hybrid debt: Contact will redeem its CEN060 Bonds, as detailed below.
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Key terms investors need to know
Rate and pricing
The Interest Rate on the new Capital Bonds (ticker CEN100) is fixed for an initial period of 5.5 years, then resets on each Reset Date unless the bonds are redeemed earlier by Contact.
The initial rate will be the greater of the 5.5 Year Benchmark Rate on the Rate Set Date (5 November 2026) plus the Initial Margin, and the Minimum Initial Interest Rate of 5.80% per annum.
The indicative Initial Margin range is 1.70% to 1.85% per annum. The actual margin may be above or below that range, and will be set after the bookbuild and announced by Contact via NZX on or about the Rate Set Date.
The Minimum Initial Interest Rate applies only to the initial rate. It does not apply when the rate resets on any Reset Date.
Snapshot table
| Feature | Detail |
|---|---|
| Term | 30.5 years, maturing 19 May 2057 if not redeemed before that date |
| Issue price | NZ$1.00 per Capital Bond |
| Minimum application | NZ$5,000, with multiples of NZ$1,000 thereafter |
| Interest payments | Quarterly in arrear |
| First Reset Date | 19 May 2032 |
| Ticker | CEN100 |
| Credit rating | S&P issue rating BB+ |
Features that differ from a senior bond
Contact’s terms sheet states that investors should carefully consider features that differ from a standard senior bond. These include:
- Contact may defer interest for up to 5 years at its sole discretion. Unpaid Interest is cumulative and compounds on each Interest Payment Date at the prevailing Interest Rate.
- A Distribution Stopper applies while any Unpaid Interest is outstanding, restricting certain dividends, distributions and security repurchases or redemptions.
- Contact may redeem some or all of the Capital Bonds on any date in the three months before the First Reset Date, on any Reset Date, or on any Interest Payment Date after a Reset Date, provided that after any partial Redemption, there will still be at least 100,000,000 Capital Bonds outstanding.
- Margin step-ups apply: the Initial Margin plus 0.25% per annum from 19 May 2037, and the Initial Margin plus 1.00% per annum from 19 May 2052, unless redeemed earlier.
- The Capital Bonds are subordinated to all other indebtedness of Contact, other than indebtedness expressed to rank equally with, or subordinate to, them. They rank equally with Contact’s NZ$250 million CEN090 Bonds (5.67% per annum, final maturity 3 October 2054).
Refinancing the CEN060 Bonds
Subject to the bookbuild being successful, Contact will exercise its right to redeem its NZ$225 million CEN060 Bonds (4.33% per annum, final maturity 19 November 2051) on 19 November 2026, their first reset date. Each CEN060 Bond will be redeemed at par ($1.00) plus any accrued but unpaid interest.
Trading in all CEN060 Bonds will be suspended from market close on 5 November 2026.
Proceeds from the new Capital Bonds will be used for the financing and refinancing of renewable generation and other eligible green assets under Contact’s Sustainable Finance Framework. Contact expects to apply the net proceeds to repay existing debt, including the CEN060 Bonds.
The completed King Country Energy acquisition added around 53MW of hydropower capacity to Contact’s balance sheet, and it is one of the renewable generation assets that sit within the company’s broader green financing story.
Custodial CEN060 holders who receive an allocation of new Capital Bonds may be able to apply their redemption proceeds towards settlement, and should contact their custodian for details.
For investors, the refinancing replaces a 4.33% instrument with new Capital Bonds whose initial rate is set off the 5.5 Year Benchmark Rate plus the Initial Margin, subject to the 5.80% minimum.
What are hybrid capital bonds and why do they matter?
A hybrid security sits between debt and equity. It pays interest like a bond, but ranks behind senior creditors if a company is wound up.
S&P Global Ratings (S&P) has assigned an “intermediate” equity content to the Capital Bonds. S&P will treat them as 50% equity when calculating its financial ratios for Contact, and this equity content is expected to fall to minimal (0%) on 19 May 2032.
S&P’s issuer credit rating for Contact is BBB (stable outlook). The BB+ issue rating of the Capital Bonds is two notches lower, with one notch deducted for subordination and a second for the potential for interest payments to be deferred.
Contact believes hybrid securities that are ascribed equity content are an effective capital management tool, and intends to maintain such instruments as a key feature of its capital structure.
On the green side, the Capital Bonds are Green Debt Instruments under Contact’s Sustainable Finance Framework and are certified by the Climate Bonds Initiative based on the Climate Bonds Standard. Contact has received a pre-issuance certification from the Climate Bonds Initiative in respect of the Capital Bonds.
Key dates and what happens next
The terms sheet describes its dates as indicative only. Contact may change them and has the right in its absolute discretion to close the offer early, extend the Closing Date or choose not to proceed.
- PDS lodged: Thursday, 22 October 2026.
- Offer closes: 11.00am, Thursday, 5 November 2026, subject to Contact’s right to close early, extend or not proceed.
- Rate Set Date: 5 November 2026. The initial Interest Rate and Initial Margin will be announced via NZX on or about that date.
- CEN060 redemption notice: on or about 5 November 2026, subject to a successful bookbuild.
- Issue Date: 19 November 2026, when the CEN060 Bonds are also redeemed.
- NZX Debt Market quotation of CEN100: expected 20 November 2026.
- First Interest Payment Date: 19 February 2027.
- First Reset Date: 19 May 2032.
Forsyth Barr Capital Markets Limited is Arranger and Joint Lead Manager, with Bank of New Zealand and Craigs Investment Partners Limited as Joint Lead Managers. Investors can register their interest by contacting one of the Joint Lead Managers or their usual financial adviser.
Details of the offer are contained in the product disclosure statement (PDS), available on the Disclose register (offer number OFR15288) and at www.contact.co.nz/capitalbondoffer.
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