Ampol Prices A$500 Million Subordinated Notes with 5.85% Fixed Rate Until 2034
Ampol Limited has priced A$500 million of subordinated notes due 2055, refinancing existing debt and enhancing financial flexibility. The long-term capital raise attracted strong demand from regional fixed income investors.
- A$500 million subordinated notes issued with 30-year maturity
- Fixed interest of 5.85% until 2034, then floating rate thereafter
- Proceeds to refinance notes callable in March 2026 and for general corporate use
- Expected 50% equity credit from Moody’s, supporting credit rating
- Strong investor demand from Australia, New Zealand, and Asia
Long-Term Capital Raise
Ampol Limited (ASX, ALD) has successfully priced a A$500 million offering of subordinated notes due in 2055, marking a significant milestone in its ongoing capital management strategy. The notes, targeted at wholesale investors across Australia, New Zealand, and Asia, provide Ampol with a durable source of capital to refinance existing debt and support its broader financial framework.
Refinancing and Financial Flexibility
The new subordinated notes will refinance an equivalent A$500 million tranche of subordinated notes that are callable in March 2026. By extending the maturity profile out to 30 years, Ampol is effectively pushing out refinancing risk and enhancing its financial flexibility. The proceeds will also be used for general corporate purposes, aligning with the company’s capital allocation framework.
Attractive Terms and Investor Demand
The notes carry a fixed interest rate of 5.85% payable semi-annually until January 2034, after which the rate resets to a floating benchmark plus a margin. This structure balances investor appetite for yield with Ampol’s cost of capital considerations. Greg Barnes, Ampol’s CFO, highlighted the strong demand from a diverse investor base, underscoring confidence in Ampol’s credit profile and strategy.
Credit Rating Implications
Moody’s Investors Service is expected to grant 50% equity credit for these subordinated notes, a positive signal for Ampol’s credit rating. This partial equity treatment helps maintain a healthy balance sheet and supports the company’s credit metrics, which are critical for future funding and operational flexibility.
Strategic Outlook
By successfully tapping the fixed income market with this long-dated issuance, Ampol not only secures its near-term refinancing needs but also positions itself well for future growth opportunities. The transaction reflects a proactive approach to capital management amid evolving market conditions and investor expectations.
Bottom Line?
Ampol’s latest subordinated notes issuance strengthens its capital structure, but investors will watch closely for credit rating updates and refinancing cost trends.
Questions in the middle?
- How will Moody’s final credit rating assessment impact Ampol’s borrowing costs?
- What is the investor mix and geographic distribution behind the strong demand?
- Will Ampol pursue further capital management initiatives following this refinancing?
