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CLS £29.4m Unsecured Bonds Start Trading Today
Tuesday, July 05 2011 | 10:53 AM
James Wallace
Finance Editor,
COSTAR | CLS Holdings has closed SEK 300m (£29.4m) worth of unsecured, unrated five-year bonds.
The bond investors, which can be secondary traded from today following their listing on the NASDAQ OMX Stockholm Stock Exchange, comprise a mix of Swedish insurance companies, pension funds and family trusts.
The total cost of debt was around 5.15%, comprised of a floating rate coupon of 3.75% above three months’ STIBOR, at circa 2.4%, payable quarterly in arrears.
It is thought the UK-listed commercial property investment company sought a private placement in Sweden because terms offered by the UK banking market were uncompetitive, with lenders requesting security, a rating and a higher total cost of debt – at around 7%.
“The London financing market is failing in its primary duty of offering competitive debt financing for borrowers,” a source said.
This is another example of UK property companies seeking cheaper funding sources to the traditional banking market, including British Land and Great Portland Estates recent US private placements and Derwent London’s UK convertible bonds.
After two years, CLS will have the right to redeem all outstanding bonds together with accrued interest subject to an early redemption premium to the nominal value.
Carnegie Investment Bank AB in Sweden acted as sole lead manager and bookrunner.
Yesterday, CLS confirmed it had completed the refinancing of 19 French loans with an aggregate value of €128m raising an additional €35m. In aggregate, this extra £60m brings to over £225m the liquid resources, in cash, corporate bonds and undrawn facilities, now available. CLS is thought to be pursuing an active pipeline across the UK, Sweden, France and Germany.
Landesbank Saar financed 15 loans, €100.6m, with maturities of between five and seven years, while Société Générale provided four seven-year loans worth an aggregate €28.0m, with a weighted average loan-to-value of 70% and a margin of 1.5% above EURIBOR.
Separately, CLS has signed a revolving credit facility – also outside London – with Danske Bank for SEK 300m for working capital purposes.
Sten Mortstedt, executive chairman of CLS, said: “We are delighted to have secured these loans and facilities on attractive terms to the Group. They reflect our continuing excellent relationships with Société Générale and Danske Bank, and we are pleased to welcome Saar LB as an important addition to our stable of 20 banks. It is testament to the strength of the Group’s portfolio and track record, that we are able to arrange these facilities in the current credit markets and economic climate. They give the group additional flexibility and firepower going forward.”
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