New Zealand’s largest corporate debt capital raise takes effect as we separate financially from Auckland Council

We have successfully completed New Zealand’s largest corporate debt capital raise – securing $3.4 billion of committed bank debt facilities – as we become financially separate from Auckland Council today.

Our financial separation from Auckland Council is a key component of the government’s Local Water Done Well legislation that was announced in May 2024.

Chief executive Jamie Sinclair says completion of the debt capital raise marks the start of a new era for Watercare and its customers.

“Last year, the government gave us an ambitious deadline for financial separation by 1 July, and a huge amount of work has gone into getting us to this point.

“We were able to meet this deadline and achieve great value for Aucklanders due to a strong Aa3 credit rating from Moody’s and a competitive bank debt capital raising process involving leading local and international banks.

“We’ve also had a lot of support from the team at Auckland Council and our professional advisors, who have supported us through the financial separation and funding process and helped us to achieve a fantastic result for Auckland.”

We have established a $2.6 billion revolving credit facility and an $800 million standby facility – $3.1 billion was jointly underwritten by Bank of New Zealand, Commonwealth Bank of Australia and Westpac NZ, with the remainder provided by Bank of China, Auckland Branch, via a bilateral tranche under the standby facility.

“We received a strong response to our bank debt capital raising process and have managed to secure very competitive funding rates which are better than we’d anticipated when we published our 10-year Business Plan. Over the next two years, we’ll be spending about $21million less on interest than we had budgeted for, so this is excellent news for our customers. I’d like to thank each of our lead banks – and the wider syndicate of banks who will be supporting us – for stepping up and allowing Aucklanders to get the best value for money.”

We have also agreed on terms for paying back the $4 billion we owe to Auckland Council over the next five years.

Mayor Wayne Brown says the financial separation is good news for ratepayers.

“This is a positive outcome and came out of a deal we struck with Wellington to keep water affordable for Aucklanders. Watercare will now be financially independent and have the capacity to get on and deliver key wastewater and drinking water projects for the Auckland region. Watercare’s fiscal plan is great news for Auckland ratepayers because it will improve council’s overall financial position,” says Mayor Brown.

Sinclair says: "Completing the debt capital raise and today’s financial separation means we can get on and deliver the ambitious $13.8 billion infrastructure investment we outlined in our 10-year Business Plan.

“The access to committed bank debt facilities to fund this investment means we can deliver essential new and upgraded infrastructure without steep price increases for our customers. It means the cost of upgrading assets is more evenly spread across the lifespans of these assets, so we don’t have today’s customers paying more than their fair share.”

Our10-year Business Plan covers more than 1000 projects aimed at ensuring reliable water and wastewater services all over Auckland and supporting population growth. The investment will help to keep the environment healthy by reducing the frequency of wastewater overflows onto land and into waterways.

Institutions involved in the debt capital raise:

• Mandated Lead Arrangers, Underwriters & Bookrunners: Bank of New Zealand; Commonwealth Bank of Australia; Westpac NZ

• Mandated Lead Arranger & Bookrunner: Bank of China Limited, Auckland Branch

• Mandated Lead Arrangers: ANZ Bank New Zealand Limited; The Hongkong and Shanghai Banking Corporation Limited (HSBC); MUFG Bank, Ltd. Auckland Branch; Société Générale, Singapore Branch

• Lead Arrangers: China Construction Bank Corporation, New Zealand Branch; Industrial and Commercial Bank of China (New Zealand) Limited; Citibank N.A., New Zealand Branch

• Financial advisor: Mafic Partners

• Legal advisor: Simpson Grierson