London & Quadrant launches £300m bond issue
bondsLondon&Quadrant London & Quadrant HG has successfully issued a £300 million, 30-year bond at 115 basis points over the gilt.
The issue was more than three times over-subscribed, according to L&Q finance director Waqar Ahmed, with subscriptions reaching 1.06 billion.
Over 40 investors participated, including two who were new to the sector.
The issue was rated AA2 / AA- by the credit rating agencies.
Barclays Capital and Royal Bank of Scotland acted as joint lead managers, and acted with Goldman Sachs as joint book-runners.
The deal is structured as a bullet re-payment, and carries an asset cover covenant of 105 per cent for properties valued at EUV-SH and 115 per cent for properties assessed at market value.
Some 3,200 properties were offered as security.
Mr Ahmed said: 'This is a fantastic deal which is a real confidence boost, not just for ourselves but for the sector as a whole.'
The cash will be used to fund L&Q's five-year development pipeline of 10,000 units.
Mr Ahmed said that five factors aided the deal:
- Government support for the sector;
- L&Q's strong credit rating;
- Its strength in relation to other RSLs, in particular its non-reliance on asset sales;
- The organisation's transparent structure, thanks to its 2008 amalgamation;
- Its low gearing ratios in relation to other RSLs.
Mr Ahmed added that L&Q's strong London and south-east-focussed property base was an additional beneficial factor.
The deal is structured so that the group can undertake further issuance on the same platform if it desires, he said.
