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Assured Guaranty wraps £98m student halls refinancing

The deal is the second in the sector supported by the monoline insurer in recent months as it increases its support for student accommodation.

UK-based student accommodation developer Uliving has issued £98.2 million ($121.9 million; €115.2 million) in bonds to refinance projects built in 2013.

The 42-year bonds have been guaranteed by monoline insurer Assured Guaranty, allowing them to be rated AA by Standard & Poor's. They will be used to help refinance two accommodation complexes at the University of Essex which have a total of 1,429 rooms and were completed in 2013.

The bonds were issued at a negative real yield by a publicly listed special purpose vehicle set up by Uliving. The proceeds will refinance all of the projects’ existing senior debt, cover costs and funding reserves and pay a refinancing gain to shareholders and the university.

“We are now seeing a stronger flow of refinancing opportunities like this one, across various sectors and PFI projects, because of the current low interest rate environment, coupled with the increased number of investors choosing to invest in longer maturities in order to match their liabilities,” said Dominic Nathan, managing director at Assured Guaranty Europe. “These are excellent conditions to refinance with a wrapped bond and reduce the cost of debt.”

The deal is the second in the sector to receive support from Assured Guaranty this year. The firm provided an investment-grade wrap to a £86.8 million loan issued by the Pension Insurance Corporation for a new 511-room development in London last month. Assured Guaranty’s European chief executive Nick Proud told Infrastructure Investor last year after its acquisition of the UK-based arm of MBIA Insurance Corporation that it is seeing strong activity in the university accommodation sector, particularly on developments financed just after the financial crisis.

The refinanced 649-bedroom, £22 million Meadows complex was built in 2012 while the 780-bedroom Quays development was built in 2013 after receiving equity and debt backing from Equitix and Aviva respectively.