Mercury Eyes $250M Green Bond to Refinance Debt at Investment Grade BBB+ Terms

Mercury eyes $250 million green bond raise to refinance existing debt

Mercury NZ Limited (ASX: MCY) is considering a Mercury Green Bond Offer of up to $200 million, with capacity to accept an additional $50 million in oversubscriptions at the company’s discretion. The 7-year unsecured, unsubordinated, fixed rate green bonds target institutional investors and New Zealand retail investors, with full details expected in the near term subject to market conditions.

The bonds are expected to receive a BBB+ issue credit rating from S&P Global Ratings, matching Mercury’s existing corporate credit rating of BBB+ (stable outlook). This investment-grade rating signals Mercury’s ability to access debt markets on favourable terms whilst optimising its capital structure through green financing instruments.

The offer targets institutional investors and New Zealand retail investors, with the company appointing Westpac Banking Corporation as Arranger and multiple firms as Joint Lead Managers to facilitate the transaction.

What are green bonds and why do companies issue them?

Green bonds are debt instruments where proceeds are allocated exclusively to environmentally beneficial projects or refinancing activities. These instruments follow established frameworks that ensure transparency around fund allocation, providing investors with verifiable confirmation that their capital supports sustainable outcomes.

For issuers, green bonds offer access to dedicated sustainability-focused capital pools, potentially securing pricing benefits compared to conventional debt. They also demonstrate tangible alignment with environmental, social, and governance (ESG) commitments, which can strengthen relationships with stakeholders increasingly focused on climate-related disclosures.

Mercury’s 100% renewable generation profile positions the company as a natural issuer of green bonds, with its operations inherently aligned to environmental objectives. This authenticity may prove attractive to investors seeking genuine green credentials rather than token sustainable finance initiatives.

Mercury’s Green Financing Framework

Proceeds from the Mercury Green Bond Offer will be notionally allocated under Mercury’s Green Financing Framework dated February 2026. The company has stated its current intention is to refinance existing debt rather than fund new capital projects.

Refinancing existing debt through green bonds is standard practice in sustainable finance markets, allowing issuers to release capital for future deployment or optimise borrowing costs whilst maintaining the green bond’s environmental integrity. The framework ensures proceeds remain tied to Mercury’s renewable generation assets and related eligible activities.

Offer structure and how investors can participate

Mercury has appointed the following parties to manage the Mercury Green Bond Offer:

• Arranger: Westpac Banking Corporation (acting through its New Zealand branch)
• Joint Lead Managers:
• Bank of New Zealand
• Craigs Investment Partners Limited
• Forsyth Barr Limited
• Westpac Banking Corporation

There will be no public pool for the offer, with all green bonds reserved for clients of the Joint Lead Managers, institutional investors, and other primary market participants. Investors can register interest by contacting a Joint Lead Manager or their usual financial advice provider.

Registrations of interest do not constitute binding obligations or commitments. No money is currently being sought, and no applications can be accepted until the offer formally opens. The bonds are expected to be quoted on the NZX Debt Market following completion of the offer, if it proceeds.

Retail investors seeking allocation should establish contact with the listed channels promptly once full offer details are released, given the reserved allocation structure favouring Joint Lead Manager clients.

Mercury’s renewable energy profile underpins green credentials

Mercury operates electricity generation assets producing power from 100% renewable sources, comprising hydro, geothermal, and wind facilities. The company also retails electricity, gas, broadband, and mobile services across New Zealand.

Mercury maintains dual listings on the NZX and ASX under the ticker MCY, with foreign exempt listed status on the Australian exchange. The New Zealand Government holds a legislated minimum 51% shareholding in the company, providing structural stability underpinning its credit profile.

The combination of government majority ownership and exclusively renewable generation provides defensive characteristics that may appeal to income-focused investors considering the bonds as fixed-income instruments. The BBB+ rating places Mercury in the lower tier of investment-grade credits, balancing yield potential with credit quality for conservative portfolios seeking exposure to sustainable infrastructure.

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