Assured Guaranty wraps £63m infra bond

Proceeds will be used to finance the construction of student accommodation in Edinburgh, UK.

Assured Guaranty (Europe) has concluded the issuance of £63 million (€72 million; $95 million) in wrapped bonds which have been used to back the construction of student housing in Scotland.  

The Holyrood Student Accommodation project involves the construction of postgraduate accommodation and associated facilities for the University of Edinburgh, comprising 1,165 rooms and teaching facilities.  

Balfour Beaty is supplying equity and subordinated debt to back the project, and Balfour-owned companies will build and maintain the buildings, AGE said in a statement.  

The bonds, which were placed on the Irish Stock Exchange, priced at 5.533 percent (215 basis points above gilts) for £31.5 million of fixed-rate bonds and at 1.9713 percent (190 basis points above gilts) for £31.5 million of index-linked bonds, AGE said.  

The bonds mature in 2048, and were rated AA- and A2 by S&P’s and Moody’s respectively, while the underlying project was rated BBB and Baa3 by the pair.  

AGE chief executive Nick Proud said in the statement: 

“This is the second wrapped bond issuance we have closed this month in the UK and is further evidence that the monoline model can provide UK infrastructure projects with direct access to the capital markets to raise cost effective debt. We are very pleased with the pricing of this bond issuance and it reflects strong investor demand. We have further PPP transactions in our pipeline and the capacity to guarantee a significant quantum of infrastructure debt in the future.”