Radian secure £300 million of funding using innovative deferred bond transaction
Radian has secured £300 million of funding to support their growth plans and enable them to continue to invest in communities in the South of England.
The bonds, which were rated A1 by Moody’s Investor Services, provide Radian with £30 million on day one and a further £100 million in instalments over the next five years. Another £170 million of bonds will be retained by Radian to sell to investors in the future.
The fully paid bonds have a 30 year maturity and are priced at a credit spread of 120bps above the yield on the benchmark gilt.
The terms of the deferred bonds were agreed on day one, providing Radian with certainty that future funding will be delivered at a known cost. The deferred bonds have a 35 year maturity and are priced at a credit spread of 127bps above the yield on the benchmark gilt. The different maturities allow Radian to spread their future refinancing risk whilst maximising competitive tension by tailoring to investor preferences.
Andrew Newberry, Radian’s Finance Director, said: “Our second issuance in capital markets has secured our medium term financial requirements by providing long-term funding to support our plans to deliver badly needed affordable housing in the South of England. The deferred structure allows us to deliver future developments with the assurance that funding is available and reduces the need to rely on substantial cash balances, reducing carry costs”
“The understanding of our needs developed through our advisory relationship with TradeRisks was essential to allow us collaborate to achieve the unique deferred structure of this bond issue.”
TradeRisks acted as arranger and dealer of the issue, with Allen & Overy as the capital market lawyers. Radian was supported by Devonshires as legal advisers.
Jon Slater, Joint Chief Executive of TradeRisks, said: “Radian’s transaction represents a significant evolution in the flexibility that is available to housing associations and other corporates to produce significant cost savings”.
“The ability to deliver both the deferred structure and the significant improvement in spread since Radian’s first capital market issuance demonstrates the benefits of issuers and investors collaborating directly without the constraints of a syndicated bond issuance process. The deferred structure offers a win-win scenario for both investors and issuers and we expect that this transaction will pave the way for increased draw down flexibility across the sector”.
For further information please contact Jon Slater on 020 7382 0957 or jonslater@traderisks.com