On Friday 6 July, BCR raised €225m of 6.25% notes due December 2014, issued under its existing EMTN programme. Including fees, the effective interest rate is 6.34%. This compares to yields of c.7.34% that current Portuguese Government 2 year debt1 trades at. The funds raised will be used to refinance existing senior debt, improving BCR’s debt maturity profile.
The issue’s offer period was open from 18 June to 3 July and the results were announced on 4 July. The initial size of the offering was €150m, but the strength of demand seen during the process led to the size being significantly increased to €225m (a 50% increase).
Ultimately by the end of the offer period bids for €258m of notes had been received, an oversubscription of nearly 15% on the increased facility.
These notes were structured in such a way as to be aimed principally at Portuguese retail investors, the fifth such issue by a Portuguese company. As evidenced by this success, there is clearly demand for this type of product, which will help BCR diversify its sources of funding beyond the more traditional sources. It is likely that corporates in Portugal will look to raise more funds via this route in the future.
Long dated €100m BCR Private Placement
BCR has also raised a further tranche of debt through a private placement, targeting a different, longer term investor base. The €100m Fixed Rate/CPI linked Rate notes are due 2032, providing long term financing for BCR. The coupon is fixed at 6% for the first 5 years and will then be at a floating rate determined by reference to Portugal’s prior year CPI. Today, the 25 year Portuguese Government debt yields 9.3%2 . BCR’s toll tariffs are set by reference to the same CPI and so any change in the cost of financing will be naturally hedged with changes to BCR’s tariffs and therefore revenues. This is the first such issue by BCR and again accesses a different source of funding on a very long tenor.
This information note (“Note”) has been prepared by Arcus European Investment Manager LLP (“Arcus”) for use solely for information purposes. Arcus makes no representations or warranties to the accuracy or completeness of any past, simulated or estimated performance results contain herein, and further nothing contained herein shall be relied upon as a promise by, or representation by, Arcus whether as to past or future performance results.