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Financial markets

Supermarket Income REIT plc Successfully Issues Debut APS250 Million Sterling-Denominated Senior Unsecured Bond

Strategic Insights

— 2 min read

Supermarket Income REIT plc, a leading UK-based property company, has made a significant move in the market by issuing its debut APS250 million sterling-denominated senior unsecured bond. This strategic decision aims to diversify the company's capital structure and transition towards primarily unsecured financing. The bond, with a term of six years, bears a coupon of 5.125% and was priced at a spread of 115 basis points over the benchmark, attracting robust investor interest with an orderbook exceeding APS985 million.

Key Takeaways:

  • Supermarket Income REIT plc has successfully issued its debut APS250 million sterling-denominated senior unsecured bond, representing a strategic move to diversify its capital structure and transition towards primarily unsecured financing.
  • The bond carries a term of six years, a coupon of 5.125%, and was priced at a spread of 115 basis points over the benchmark.
  • Investor interest was strong, with the orderbook exceeding APS985 million, despite the high demand, the company was able to manage the transaction effectively.
  • Fitch Ratings Ltd is expected to assign an investment-grade rating of BBB+ to the bonds, consistent with the existing issuer ratings of Supermarket Income REIT plc.
  • The net proceeds from the bond issuance will be directed towards general corporate purposes, including the refinancing of existing debt facilities, extending the company's average debt maturity profile by almost two years.
  • The pro-forma Loan-to-Value (LTV) ratio of 34% and the weighted average debt maturity of 4.6 years demonstrate the company's prudent approach to debt management.
  • The bond issuance marks a significant milestone for the company, enhancing its financial flexibility and supporting its long-term growth strategy, according to Mike Perkins, Chief Financial Officer.
  • The CFO emphasized the benefits of securing longer-term financing at a fixed rate, which is expected to lower medium-term borrowing costs and boost potential earnings from the company's acquisition pipeline.

Statistics:

  • APS250 million: The amount of the sterling-denominated senior unsecured bond issued by Supermarket Income REIT plc.
  • 6 years: The term of the bond.
  • 5.125%: The coupon rate of the bond.
  • 115 basis points: The spread over the benchmark at which the bond was priced.
  • APS985 million: The amount of the orderbook that exceeded the demand for the bond.
  • 4.6 years: The weighted average debt maturity of the company.
  • 34%: The pro-forma Loan-to-Value (LTV) ratio of the company.
  • 4.7%: The interest rate exposure hedged by the company through the deployment of joint venture proceeds.

Sources:

  • Johannesburg Stock Exchange (JSE)
  • Fitch Ratings Ltd
  • Barclays
  • Goldman Sachs
  • HSBC
  • Wells Fargo
  • NatWest
  • Rothschild and Co
  • Supermarket Income REIT plc

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