New Zealand infrastructure provider Watercare Services has successfully completed the country’s largest corporate debt capital issue, raising NZ$3.4 billion of bank facilities.
Watercare, which recently separated from its parent organisation the Auckland Council, raised the debt to enable the delivery of a NZ$13.8 billion 10-year business plan comprising more than 1000 projects aimed at ensuring reliable water services to a population of 1.4 million people on the New Zealand North Island.
Watercare’s separation from the council is a key component of the Luxon Government’s ‘Local Water Done Well’ legislation announced in May 2024 as a replacement for the previous government’s Three Waters program.
The Local Water Done Well program emphasises financial sustainability, mandates infrastructure upgrades and also cost recovery, with charges reflecting the cost of service delivery.
The Watercare debt raising comprises a NZ$2.6 billion revolving credit facility and a NZ$800 million standby facility, with NZ$3.2 billion underwritten by the Bank of New Zealand, the Commonwealth Bank of Australia, and Westpac NZ.
The balance was provided by the Bank of China’s Auckland branch.
“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,” said Jamie Sinclair, Watercare’s chief executive.
Watercare was rated at Aa3 by global ratings agency Moody’s and this enabled competitive funding rates which Sinclair said “are better than expected when we published our 10-year business plan.”
“Over the next two years we’ll be spending NZ$21 million less on interest than we had budgeted for, so this is excellent news for our customers,” he said.
Watercare has also agreed on terms for paying back NZ$4 billion owed to the Auckland Council over the next five years.
The 10-year plan was announced in March, with around half of the NZ$13.8 billion investment to be spent on replacing or upgrading existing assets, with the other half spent on expanding the network to support population growth. The plan also includes two major projects.
In west Auckland, Watercare will replace the ageing Huia Water Treatment plant with a new facility which can produce up to 160 million litres a day to improve system resilience.
As part of this project, two key watermains which convey water to the dams will be replaced and two large storage reservoirs will be built.
The other major project is the Mangere Wastewater Treatment Plant which serves around three quarters of Auckland’s population.
Watercare will upgrade equipment and improve processes at the plant to meet discharge requirements protecting the Manukau Harbour.
