Assured Guaranty (Europe) Ltd. (AGE) has announced that it has guaranteed principal and interest payments on approximately £261 million (US$325 million) of bonds and notes raised by St. James’s Oncology Financing Plc to refinance a PFI project for the design, building and maintenance of the Bexley oncology wing of the St. James’s University Hospital in Leeds. As a result of the guarantee, the bonds and notes are rated AA by S&P Global Ratings. The underlying project is rated BBB.
The 20-year bonds and notes were issued on 31 March 2017. The spread over the relevant spot Gilt rate is 140 bps per annum. The debt issuance was innovatively structured to provide three tranches of debt: a private placement note issuance, a listed fixed rate bond issuance and a listed index-linked bond issuance, with the total issuance being oversubscribed due to high demand from investors.
The original Bexley oncology project reached financial close in 2004 and has been fully operational for approximately 9 years, having been successfully built and operated by St. James’s Oncology SPC Limited (ProjectCo) for the Leeds Teaching Hospitals NHS Trust.
The 350 inpatient Bexley Wing, home to Leeds Cancer Centre and a national specialist transplantation centre, is part of Leeds Teaching Hospitals NHS Trust, one of the largest teaching hospitals in Europe, serving a population of 850k in Leeds and 4.5m across Yorkshire and the Humber region. ProjectCo is owned by Civis PFI/PPP Infrastructure Fund and Aberdeen Infrastructure Partners, each with an indirect 50% equity share.
Dominic Nathan, Managing Director, Assured Guaranty (Europe) Ltd, commented:
"The significant market demand allowed the transaction to be priced with a competitive spread of 140 bps per annum which attests to the high demand from investors for long dated, guaranteed debt that can match their liabilities. The continued low interest rate environment has created the ideal conditions for sponsors to refinance, significantly reducing the cost of their current debt, as well as increasing the amount of proceeds.”
Nick Proud, Chief Executive, AGE, commented:
“This is our largest transaction since 2008 and it attracted significant interest from investors, including U.S. private placement investors as a direct result of the innovative structuring which included a private placement tranche. We have guaranteed approximately £450 million of new market issuance in the space of one week, evidencing the fact that Assured Guaranty have firmly returned to being an important force in the infrastructure capital markets."
AGE guarantees timely payment of scheduled principal and interest to bondholders and noteholders throughout the life of the debt, in accordance with the terms of its financial guarantees.
The advisers of AGE on the deal were CMS Cameron McKenna (legal adviser), Faithful & Gould (technical adviser) and Marsh (insurance adviser). Lloyds Bank was the bond lead manager and its US broker dealer Lloyds Securities Inc. acted as placement agent.