Ferrovial places a 500 million euro 2.124% perpetual hybrid bond Published on 07/11/2017
- The company took advantage of current low market interest rates.
- Issues of this type enhance the Group’s ability to invest in infrastructure projects given the prospects of growth in tenders in the main countries where it operates.
Taking advantage of a favorable market environment with low interest rates, Ferrovial today successfully priced a 500 million euro perpetual hybrid bond. The issue pays a 2.124 % annual coupon until 14 May 2023. Subsequently, it will pay a fixed coupon equal to the applicable swap rate plus a spread of 2.127% until 14 May 2043 and of 2.877% thereafter. The swap rate will be updated every five years.
The company plans to allocate the funds to general corporate needs.
“We decided to issue hybrids because of their current low cost and in order to expand our investment capacity, since they have a high equity component,” said Ernesto López Mozo, CFO of Ferrovial.
The order book was very diversified, and the deal was extremely well received by international investors. Over 90% was placed outside Spain, notably in the UK, Ireland and France.
Fitch and Standard & Poor’s are expected to assign a BB+ rating to the bonds, two notches below Ferrovial’s corporate debt rating, as is standard for hybrids.
Ferrovial successfully completed two 500 million euro 3.375% senior bond issues in January 2013 (5 years) and May 2013 (8 years) In 2014, it issued a 300 million euro 10-year senior bond paying a 2.5% coupon. And in 2016, Ferrovial placed a 500 million euro 6-year senior bond at 0.375%, the lowest yield achieved in Spain for that maturity. In March 2017, Ferrovial placed a fifth senior bond: 500 million euro at 8 years paying 1.375%.
Fitch and Standard & Poor’s rate Ferrovial’s corporate senior debt at BBB, with a stable outlook.