Grosvenor taps US private placement market again with £90m bond issue

Grosvenor has raised £90m via the private placement of a sterling-denominated bond in the US.

The financing consists of  two tranches: £60m of 10-year notes, which carry a coupon  of 3.38%, 190bps over the benchmark gilt; and £30m of  25-year notes with a coupon of 4.97%, reflecting a 220bps margin over the benchmark gilt. The unsecured notes are priced to yield 3.91%; closing is expected in October.

Grosvenor is particularly pleased that it raised the money in sterling; a dollar-denominated issue would attract more potential investors, but would create the need for a currency swap, as the group plans to invest the funds mainly in its London estate.

“We prefer to take sterling and not have to enter a long-dated currency swap,” said Roger Blundell, finance director of Grosvenor Britain and Ireland. The group has been diversifying its funding sources and the issue was placed with US investors and some UK ones.

Grosvenor has used the US private placement market previously; in February 2011 it raised £125m using this route. “We wanted a small group of investors with whom we could build long-term relationships,” said Blundell.

Grosvenor’s earlier issue was also sterling-denominated but had different maturities, with a 20-year tranche of £95m and a 30-year tranche of £30m. The coupons on those were 5.57% and 6.05% respectively, and the issue was priced to yield 5.69%. The current issue has been placed with investors in London and the US. Royal Bank of Scotland was the sole bookrunner on the deal.