LONDON--(BUSINESS WIRE)--Assured Guaranty (Europe) Ltd. (AGE)* announced that it has guaranteed principal and interest payments on approximately £186 million of bonds issued by East Slope Residencies PLC. The bond issuance raised approximately £197 million of proceeds to finance the construction of new halls of residence at the University of Sussex (the University)**. As a result of the guarantee, the bonds are rated AA by S&P Global Ratings. The underlying project is rated BBB.
The publicly listed 45-year inflation-linked bond priced on 27 March 2017 at a spread of 155 bps per annum and was able to take advantage of the current low long term real rates by issuing at a negative real yield (prior to adding in inflation). In order to address what would otherwise be a negative coupon, the bonds were issued at a premium price of approximately 106% with a real coupon of 0.10%.
Balfour Beatty will build and maintain the halls through wholly owned subsidiaries and are the main sponsor of the project company, East Slope Residencies Student Accommodation LLP (ProjectCo). The University has a 20% stake in ProjectCo.
The bonds will finance the development of the University’s flagship halls of residence on the eastern part of its campus, involving the demolition of a 568 existing bed facility and the construction of a 2,117 new bed facility, several communal social spaces and a new student union.
Dominic Nathan, Managing Director, AGE, commented:
"This is our fourth wrap for a UK university since 2013, and our third in just over three months, representing approximately £450 million of guarantees in the sector. For the university sector, where the concessions have 40-year maturities or more, the use of our AA wrap adds value in two ways. Firstly, it provides very long term debt that is ideal to match the lives of these types of projects and, secondly, 100% inflation-linked debt provides highly efficient financing that adds real value to the sponsors. We continue to see strong demand for this type of wrapped bond issuance across various sectors and an increased number of investors choosing to invest in longer maturities to match their liabilities.”
Nick Proud, Chief Executive, AGE, commented:
“There is strong demand from investors for highly rated infrastructure bonds as a direct result of Solvency II, as evidenced by the very competitive spread achieved for a deal of this nature. In this transaction, as with others we have closed recently, a wrap proved to be the most cost-effective solution to deliver this financing."
AGE* guarantees timely payment of scheduled principal and interest to bondholders throughout the life of the bonds, in accordance with the terms of its financial guarantees.
The advisers of AGE* on the deal were Norton Rose Fulbright (legal adviser), Gleeds (technical adviser), CBRE (demand adviser) and AON (insurance adviser). HSBC was the bond lead manager and bookrunner.
All of the securities having been sold, this announcement is for information purposes only. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended ("Securities Act"), or with any securities regulatory authority of any state or jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States.
* AGE (company number 2510099) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. AGE provides its financial guarantee together with a co-guarantee from its affiliate Assured Guaranty Municipal Corp. (AGM).
Through its subsidiaries, Assured Guaranty Ltd. (AGL and, together with its subsidiaries, Assured Guaranty) is the leading provider of financial guarantees for principal and interest payments due on municipal, public infrastructure and structured financings. Its subsidiary AGM guarantees international infrastructure and U.S. municipal bonds - and was previously named Financial Security Assurance Inc. (FSA) before becoming an Assured Guaranty company in July 2009. AGE, a subsidiary of AGM, is Assured Guaranty’s European operating platform. AGL is a publicly traded (NYSE: AGO), Bermuda-based holding company. More information on AGL and its subsidiaries can be found at AssuredGuaranty.com.
** THE BONDS WERE NOT FOR SALE IN THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN NOR SOLD FOR BENEFICIAL OWNERSHIP BY PERSONS IN THOSE JURISDICTIONS.
Cautionary Statement Regarding Forward-Looking Statements:
Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from Assured Guaranty’s inability to execute its strategies; the demand for Assured Guaranty’s financial guarantees; further actions that the rating agencies may take with respect to Assured Guaranty’s financial strength ratings; adverse developments in Assured Guaranty’s guaranteed portfolio; and other risks and uncertainties that have not been identified at this time, management’s response to these factors, and other risk factors identified in AGL’s filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of 3 April 2017. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.