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Caltex Australia to Issue $A150 Million Floating Rate Notes

Strategic Insights

— 1 min read

Caltex Australia will issue $A150 million in three-year floating rate notes on the Australian capital market this week, with the lead manager, National Australia Bank, expecting the notes to price at least 70 basis points above the Bank Bill Swap Rate. The notes have been rated BBB-plus by Standard & Poor's and will include a maintenance of ownership clause that gives investors a put option in the event of a change of ownership in Caltex resulting in a ratings downgrade. The issue is for refinancing purposes, with a Caltex subordinated debt issue due to expire on January 31. The move follows confirmation by Chevron Corp that it is in merger talks with Texaco Inc, which could potentially increase the value of the notes.

Key Takeaways:

  • Caltex Australia will issue $A150 million in three-year floating rate notes on the Australian capital market.
  • The notes have been rated BBB-plus by Standard & Poor's and are unrated long-term by Moody's Investor Service.
  • The issue is for refinancing purposes, with a Caltex subordinated debt issue due to expire on January 31.
  • The notes include a maintenance of ownership clause that gives investors a put option if there is a change of ownership in Caltex resulting in a ratings downgrade.
  • The issue is expected to price at least 70 basis points above the Bank Bill Swap Rate.
  • The lead manager, National Australia Bank, believes the merger talks between Chevron Corp and Texaco Inc could potentially increase the value of the notes.
  • The issue will be free and clear of withholding tax, allowing access for foreign investors.
  • Caltex Australia is 50% listed on the Australian Stock Exchange, with the remaining 50% owned by Caltex Petroleum Corporation, jointly owned by Texaco and Chevron.

Statistics:

  • $A150 million: Issue size of the three-year floating rate notes.
  • 70 basis points: Minimum expected price above the Bank Bill Swap Rate.
  • BBB-plus: Rating assigned by Standard & Poor's.
  • January 31: Expiration date of the Caltex subordinated debt issue.
  • 50%: Percentage of Caltex Australia listed on the Australian Stock Exchange.
  • 50%: Percentage of Caltex Australia owned by Caltex Petroleum Corporation.

Sources:

  • National Australia Bank (ASX:NAB)
  • Standard & Poor's
  • Moody's Investor Service

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