SYDNEY, Sept 3 (Reuters) - Australian energy firm Santos Ltd will meet next week with European investors to explore their interest in a hybrid issue, it said on Friday.
Hybrid securities were a popular form of debt in Australia before the global financial crisis hit and Santos will be one of the first Australian firms to make a come back to the market.
Santos's hybrid issue would complement an up-to A$2 billion rights issue to fund its A$15 billion Gladstone liquefied natural gas project, according to local media. See
The exploration firm has hired Deutsche Bank and UBS to gauge investor feedback on a possible hybrid issue and will hold presentations in London, Paris and Frankfurt, a person who has been in contact with Santos said.
The possible hybrid issue, which will stand between debt and equity, could be denominated in euro or sterling depending on demand, the person said.
Issue size, structure and ratings have yet to be determined, the person added.
Market sources say Santos's hybrid issue is likely to ressemble the structure of UK-based Scottish and Southern Energy , which is currently marketing a perpetual hybrid offer with coupon step-up features.
Hybrid securities typically rank two or three notches below senior debt. Since Santos is rated BBB-plus by S&P, a hybrid issue is expected to be rated BBB-minus or BB-plus which is below investment grade.
