Intu became the latest property company to offer a refinance deal this week with a £375m bond issue.
The shopping centre owner said it would use the proceeds from the issue, with a coupon of 2.9%, to finish its £212m development pipeline over the next two years. It will also refinance its £101m revolving credit facility from its purchase of intu Merry Hill in Birmingham.
The company originally announced an offering of £350m at a coupon of between 2.4% and 2.9% on Tuesday morning, adding an option for an additional £50m.
It is the latest to take advantage of low interest rates to refinance since September, following bond issues and private placements by LondonMetric, Kennedy Wilson Europe and SEGRO.
Analysts at Jefferies raised concerns that investors were not confident in the industry when only £25m of intu’s increase option was taken up.
They said the issue also had a higher cost of debt than it could have had, with a coupon that was at the high end of what it offered, while its conversion price was £3.8 per share, a 7% discount on intu’s NAV in June.
However, Matthew Roberts, chief financial officer of intu, said the bond issue confirmed investors’ enthusiasm rather than their worry.
“We went with £350m bonds and said that if there was sufficient demand, we would upscale it, and we upscaled it to £375m. We announced it at seven and the deal was done before midday,” he said.
“We have got a good sum of money,” he added. “Getting six-year money at less than 3% is a good trade.”
The bonds’ coupon is below intu’s average cost of debt of around 4.5%.
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