NBN borrows $2.6 billion via US bonds

The government-owned NBN Co has taken on a fresh $US2 billion (~$A2.6bn) in debt via a bond issue in the US as it seeks to wean itself off federal government funding.

The issue was made up of a five-year bond of $US750m and a 10-year bond of $US1.25 billion. The five-year bond will mature in May 2026, while the ten-year bond will mature in May 2031. 

While the NBN did not disclose the interest rates on the two tranches of debt, it’s likely to be between around 1.4% for a five-year bond and 2.7% for 10-year based on current market rates.

The company said the funds will be used for general corporate purposes, including refinancing part of the outstanding A$16.5 billion balance on a loan it owes the Commonwealth, plus future capex plans.  

NBN Co. is planning to convert the government funding to private debt by 30 June 2024.  

The latest borrowing means NBN Co has now raised more than A$12 billion in new debt, including $A8.5 billion in private bank debt and $A1.6 billion through five and 10-year domestic bonds in the last 12 months.