Summerset to offer its sevenyear bonds at a 4.15% minimum

WELLINGTON: Summerset Group will sell up to $100 million worth of sevenyear fixedrate bonds as it cuts its reliance on bank debt.

The retirement village operator and developer announced its planned offer last week. At the time, chairman Rob Campbell said he was pleased the firm was considering another retail bond issue after raising $100 million in June 2017, with an oversubscription of 33.3%. The interest rate for those bonds, which will mature in July 2023, was set at 4.78% per annum. They last traded at a yield of 3.7%.

The new issue will pay a minimum interest rate of 4.15% per annum and is expected to be priced at an indicative margin of 1.65% to 1.75% above the seven year swap rate, which was recently at 2.53%. That implies the final rate will be set at 4.18% to 4.28%. The actual margin will be set on September 14 after a bookbuild process. The bonds will be issued on September 24.

Wellingtonbased Summerset had net debt of $364.5 million as at June 30, $279.3 million drawn from its $500 million banking facility. The bank debt matures in two tranches: August 2020 and March 2022.

The firm has appointed ANZ Bank New Zealand as arranger, and ANZ, First NZ Capital Securities, Forsyth Barr and Hobson Wealth Partners as joint lead managers. There is no public pool for the bonds.

Summerset shares last traded at $7.60 and have risen 38% this year. — BusinessDesk