Tag: debt issue

Colonial Completes First Ever Debt Issue By A RE Company

28 May 2015 – Expansión

Colonial placed €1,250 million, but demand exceeded €2,700 million. The real estate company, controlled by the Villar Mir group will use these funds to refinance a bank loan, whereby reducing its financing costs.

Colonial debuted on the bond market yesterday with great success. The real estate company controlled by the Villar Mir Group completed a debt issue amounting to €1,250 million in two tranches: one over four years amounting to €750 million and the other over eight years for €500 million. It paid 1.864% for the first issue and 2.728% for the second.

This is the first debt issue ever to be carried out by a Spanish real estate company and it comes in the middle of the election hangover, which has generated considerable volatility on the markets. The debt issue aroused significant interest (demand exceeded €2,700 million with 225 purchase orders in total), which clearly shows that the confidence of investors has returned to a sector that was hit hard by the crisis (the real estate sector) and above all, to this company in particular, which underwent a tough refinancing process last year.

Lower costs

In fact, Colonial will use the funds obtained to repay a syndicated loan that it signed last year amounting to €1,040 million, which carries a high interest rate, at 400 basis points above 3-month Euribor, and which represents 40.5% of its liabilities. Sources close to the company explained yesterday that this refinancing with result in an annual saving of almost 2%. “The real estate company will stop paying around €20 million per year in interest”, they added. Moreover, the same sources noted that the company, chaired by Juan José Brugera, will no longer be bound by the conditions imposed by the banks, given that “the debt market has granted this financing with no conditions attached”.

To ensure the success of the issue, the CEO, Pere Viñolas and the Corporate Development Director, Carmina Ganyet, launched a road show on 14 May with the banks that they had engaged for the transaction: Morgan Stanley acted as the global coordinator, with the support of Sabadell, BBVA, CaixaBank, Crédit Agricole, ING and JP Morgan. The executives were well received, since S&P had assigned the company a ‘BBB-‘ rating.

As well as the plan to repay the loan to reduce financing costs, Colonial may improve its balance sheet in advance of possible M&A activity in the short term. Sacyr has considered the option of integrating its subsidiary Testa with Colonial to create a large real estate group. Colonial has been authorised to issue more bonds, amounting to €750 million.

Operation “Fade”

In addition to the activity in the private sector, the Government also plunged itself into the quest yesterday with the issue of a ‘fund to cover the electrical hole’ (“fondo que cubre el agujero electric” or Fade). It placed €1,300 million in securities that mature in September 2019, with the help of Santander, BBVA, Barclays and Citi.

The Administration is continuing to refinance this debt, which the vehicle has issued since its creation in 2009, to cover the electrical deficit (which arises due to the mismatch between the revenue received by the companies, from electricity tariffs, and the costs of generating it) at much more favourable costs. For this issue, it has only paid 0.85%, the lowest rate since the vehicle was created.

Meanwhile, the Sociedad Concesionaria Autovía de la Plata, owned by Meridiam (50%), Cintra (25%) and Acciona (25%) launched its first bond issue without a public guarantee in Spain yesterday, for €184.5 million. It is paying 3.169% for these securities, which are being traded on the MARF.

Original story: Expansión (by D. Badía and M. Anglés)

Translation: Carmel Drake

Santander & Uro Property Revive The Securitisation Market

28 May 2015 – Expansión

Debt issues amount to €2,350 million to date in 2015 / UCI, owned by Santander and BNP, is finalising the first mortgage securitisation in the market since 2007 and the Socimi Uro is closing the first rental income securitisation in Spain, for €1,345 million.

The securitisation market is being revived. Over the last few days, two Spanish companies have gone to the market to raise almost €1,700 million using these structured financing instruments, which have been in disuse since the burst of the subprime crisis in 2007.

Both of the companies are partially owned by Santander: Uro Property, the Socimi that owns one third of the bank’s (branch) network in Spain, closed a €1,350 million securitisation yesterday to refinance its business; and Unión de Créditos Inmobiliarios (UCI), jointly owned by Santander and BNP, is finalising the first mortgage securitisation since 2007, amounting to €342 million.

These two transactions come after a deal closed by Santander in February, involving the placement of a securitisation amounting to €668 million containing loans to finance car purchases granted by the Spanish branch of the French bank Banque PSA, the financial arm of Peugeot Citroën (which has an alliance with Santander). In total, these three transactions amount to €2,355 million.

Innovative debt issues

The largest transaction, the one involving Uro Property, was completed yesterday afternoon. The real estate company – controlled by Santander, CaixaBank, Atisha and Phoenix Life – has refinanced its debt through a securitisation amounting to €1,345 million, over a term of between 22 and 24 years. The most innovative aspect of this transaction is that Uro is securitising the rental income that it receives from the 750 Santander branches that it owns until its rental contract with the bank comes to an end.

The real estate company agreed a fixed rate of 3.348% with investors – mostly insurance companies and fixed income funds – whereby cut its financing cost almost in half from 6%.

Goldman Sachs has led this issue and has been supported by BNP, Santander and CaixaBank. The securitisation will be structured through a company in Ireland.

“It is quite an innovative transaction in the debt market; issues of this type have not been seen before, except for in the UK. With this, we acheive the three main objectives that we set when we took over the reins at Uro, namely to: list the company on the Alternative Stock Market (MAB); sell part of the branch portfolio [the company transferred 381 branches to Axa]; and refinance the debt”, said Carlos Martínez Campos and Simon Blaxland, Chairman and CEO of Uro Property, respectively.

In the case of the issue by Unión de Créditos Inmobiliarios, the operation is expected close this week, for €342 million.

The fund, which issues bonds backed by 3,761 loans in total for the purchase of primary residences, is called FTA RMBS Prado I and matures in 2055. The total volume of this fund amounts to €450 million, but only the highest quality tranche is going to be sold, corresponding to the €342 million issue, which has an ‘Aa2’ rating according to Moody’s, the second highest possible.

To carry out this issue, both Santander and BNP Paribas have conducted several presentations with investors around Europe. The definitive interest rate is expected to be set today.

Asset securitisations received a significant setback after the burst of the subprime crisis, given that it was structured financing that unleashed the crisis in the first place. In Spain, the market also shut down, because even though simpler and more transparent assets were traded here, they were the main source of financing of the credit boom until the burst of the real estate bubble. The outstanding balance of this type of asset exceeded €300,000 million in 2006, according to data from AIAF.

In recent years, the ECB has made significant efforts to revive this market and with this in mind, it started to buy securitisations in Europe in December.

Original story: Expansión (by J. Zuloaga and D. Badía)

Translation: Carmel Drake

Sareb May Exchange Its €57.5M Debt In Realia For Shares

20 May 2015 – El Economista

Sareb may have the option to enter the share capital of Realia, with a maximum stake of 4.5%, through the exchange for shares of the equity loans (€57.5 million) that it holds with the real estate company.

Realia will request authorisation at its next shareholders’ meeting to undertake the necessary capital increases in the event that the ‘bad bank’ decides to perform the operation.

It will undertake two capital increases, one amounting to €29 million and a second amounting to €28.9 million. In both cases, it will issue around fourteen million new shares at €2 per share, a price that almost triples (+185%) the current share price of the real estate company.

Shareholder

In this way, Realia will give the ‘bad bank’ another year to exercise its option to become a shareholder of the company. The institution will consider this possibility at a time when Realia is subject to two takeover bids (OPA), one by the Socimi Hispania and the other by the businessman Carlos Slim.

These bidders are waiting for Spain’s National Securities Market Commission (CNMV) to approve the second bid so that the acceptance period may begin.

Sareb’s equity loan in Realia was granted in September 2009, when the real estate company signed a €100 million loan agreement with its two then partners (FCC and Bankia), which each contributed 50% of the balance. FCC then exchanged its entire loan balance for shares in the company, converting it into the majority shareholder, with a stake of 36.8%, which it has already said it will not sell under either of the takeover scenarios.

Meanwhile, Bankia, which currently has an agreement to sell its 24.9% stake in Realia to Carlos Slim, transferred its share of the loan to Sareb in December 2012. The entity has not yet made any decision about the eventual conversion. Nevertheless, the financing is due to expire in 2016.

Of Sareb’s total loan amount, one tranche amounting to €29 million is “freely convertible” in nature, whilst the second tranche, amounting to €28.58 million, is “not freely convertible”, which means that the institution will have to decide between capitalising it or accepting a discount.

Slim’s arrival

Another item on the agenda at Realia’s shareholders’ meeting, which will be held on 22 June, is the ratification of the appointment of Gerardo Kuri as a Director – he is currently the Director General of Real Estate at Carso, one of Slim’s companies, as well as a Director of FCC and the CEO of Cementos Portland.

Slim appointed this spokesman and positioned him on Realia’s board, after he became the primary shareholder of FCC and that group decided to continue as a partner of the real estate company, but just days before the Mexican businessman launched his takeover bid for the company.

Realia will also ask its shareholders for approval, if they deem appropriate, of an increase in its share capital by up to half of its current size and to issue debt securities for a period of up to five years and for a maximum amount of €450 million.

Original story: El Economista

Translation: Carmel Drake

Popular Places A €1,000M Mortgage Bond Issue At 1%

25 March 2015 – Expansión

The entity has completed a 10-year mortgage bond issue amounting to €1,000 million.

The placement carries a coupon of 1%, the lowest historical rate for Popular in the last ten years. The most recent bond issue made by Popular in April 2014 carried a coupon of 2.125% and had a five and a half year term.

Specifically, 78% of the demand for the bond issue has come from international investors. It has managed to attract a lot of investors and achieve an oversubscription of 1.4 x.

In terms of the nationalities of the international investors: 31% were from Germany and 15% were from the UK and Ireland. Demand for the bond issue was highly diversified, comprising 80 orders. By type of investor, 47% were fund managers, 32% were central banks and 19% were banks.

Original story: Expansión

Translation: Carmel Drake