Balfour Beatty finances Edinburgh university project through bonds
- Assured Guaranty
- Balfour Beatty
Assured Guaranty (Europe) has announced the successful close of £63 million of wrapped bonds issued by Holyrood Student Accommodation PLC to finance the construction of postgraduate accommodation and associated facilities for the University of Edinburgh.
The project includes the construction of 1,165 rooms for postgraduate students with ancillary teaching and administrative facilities, and a restaurant, to be built in the heart of the Old Town in Edinburgh.
Balfour Beatty is the sole provider of equity and subordinated debt on the project and Balfour Beatty companies will build and maintain the buildings during 50 years. The total investment for the project is £110 million.
The Irish Stock Exchange listed bonds priced at 5.533% (215 basis points above gilts) for £31.505 million of fixed rate bonds and at 1.9713% (190 basis points above gilts) for £31.505 million of index linked bonds.
As a financial guarantor, AGE guarantees timely payment of scheduled principal and interest to bondholders throughout the life of the bonds which mature in 2048. The bonds were rated AA- (stable) and A2 (stable) by S&P and Moody's respectively, and the underlying project was rated BBB (stable) and Baa3 (stable) by S&P and Moody's respectively.
Nick Proud, Chief Executive Officer of Assured Guaranty (Europe) Ltd., commented:
Source: Assured Guaranty & Moody's
"This is the second wrapped bond issuance we have closed this month in the UK and is further evidence that the monoline model can provide UK infrastructure projects with direct access to the capital markets to raise cost effective debt. We are very pleased with the pricing of this bond issuance and it reflects strong investor demand. We have further PPP transactions in our pipeline and the capacity to guarantee a significant quantum of infrastructure debt in the future."