In another tightly contested category, the Deals of the Year judges named Saga, the UK’s specialist provider of products and services to the over-50s, as winner in the Bonds below £750m category.
Saga priced a highly successful £250m bond issue in May last year. The issuance represented Saga’s debut deal, on first-time ratings of Ba1/BB+.
However, the company attracted very strong interest, with the order book rising to more than £1.9bn at its peak, settling at £1.75bn after final pricing revision. The proceeds were used to repay an existing bank facility and other corporate purposes.
As this was Saga’s inaugural issue, the company conducted a three-day investor roadshow. On the back of positive investor feedback, good indications of interest and positive market sentiment in the wake of the French election result, Saga launched the transaction with initial price thoughts of 3.625% to 3.75%.
Saga’s successful UK roadshow and persuasive marketing story contributed to the strong outcome in terms of credit pricing
The size and quality of the order book meant the Saga team was able to exceed early expectations on pricing, achieving a 3.375% coupon, the lowest-ever sterling coupon for a sub-investment-grade corporate on a seven-year or longer maturity.
This was in spite of a low profile in the market and concerns about the brand’s identity. The Saga name has a long history, but the eclectic mix within its portfolio – from insurance to cruise ships – meant it was an identity that potentially had lacked clarity among a wider investment base previously.
Saga’s successful UK roadshow and persuasive marketing story contributed to the strong outcome in terms of credit pricing.
The deal has served to help strengthen Saga’s balance sheet, and provided additional flexibility, while further diversifying its debt structure. The transaction involved moving from a secured to an unsecured structure and brought a new set of investors on board.
The judges commended the Saga team on the very tight execution window, the successful marketing of a non-investment-grade offer and an excellent debut.
“This was another hugely competitive category, with a number of high-class deals and creativity. The Saga transaction was an excellent debut, executed within a very tight time frame.”
Issuer Saga
Amount £250m
Structure Senior unsecured debt
Rating (at time of deal) Ba1/BB+
Currency and tenor £/7yr
Interest rate/coupon 3.375%
In an initiative aimed at reducing volatility in its pension scheme, engineering group GKN successfully raised £300m in 15-year senior unsecured fixed-rate notes in April last year.
The single-tranche issuance, the first public transaction for GKN in five years, drew the judges’ attention for its size and for the innovative use of funds. The pension fund deficit acts as a constraint to corporate finance activity, the company said, and adversely impacts credit ratings.
Early investor feedback was overwhelmingly positive, with demand predominantly at the longer-tenor range. Among the deal’s distinguishing marks was the rare achievement of a 15-year tenor for a BBB- rated credit.
The £2.2bn order book – more than seven times oversubscribed – for a single tranche sterling offering also represented a standout feature.
In a transaction the judges described as “extremely complex”, RSA Insurance issued the first international restricted tier 1 bond transaction for an insurance company under the new Solvency II regulation and also refinanced two existing bond transactions via a tender.
The transaction was the first of its type under the new insurance solvency regime, and RSA Insurance’s first transaction in Swedish krona and Danish krona. Following positive investor feedback, RSA was able to price just over £300m across the two tranches, compared to the £200m it had been aiming for.
In doing so, it successfully widened its investor base to include Scandinavian investors as well as European buyers, with Scandinavian investors taking around three-quarters of both bonds.
Given the strong investor feedback, and in line with RSA’s size and pricing aspirations, final terms were set at STIBOR+525bps for a 2.5bn tranche in Swedish krona, and CIBOR+485bps for a 650m tranche in Danish krona.
The Treasurer's Deals of the Year Awards recognise the outstanding work of treasurers, both within the treasury community and the wider business world. Through them we champion the success and achievements of treasury teams that have stood out in the market over the prior 12 months. Winning an award is a great way to strengthen your organisation's and your treasury's profile, bringing peer and industry acknowledgement. Find out more here.