Heathrow completes landmark bond issue

Heathrow, the UK airport operator owned by Spanish infrastructure company Ferrovial, has successfully placed £200 million (€242 million; $332 million) of inflation-linked bonds.

StormHarbour, the international financial advisory firm, arranged the issue which is described in a statement as “one of the largest-ever single investor inflation-linked private placements entered into by a corporate in the sterling market”.

The parties to the transaction declined to name the investor, but Infrastructure Investor understands that it was a European insurance company.

The three-tranche issue was divided up as follows: £75 million maturing on 28 March 2032 with a fixed annual coupon of 1.366 percent; £50 million maturing on 28 January 2039 with a fixed annual coupon of 1.382 percent; and £75 million maturing on 28 January 2049 with a fixed annual coupon of 1.372 percent.

The statement said the issue achieved “competitive pricing compared with existing benchmark and target levels, pricing at reference Gilt +131 basis points across the three tranches.

“Inflation-linked funding is a natural fit with Heathrow’s business model so we are delighted to see a substantial new investor commit this attractive long-term financing to the business,” said Andrew Efiong, Heathrow’s director of treasury.

Heathrow, formerly known as BAA, comprises Heathrow, Southampton, Aberdeen and Glasgow airports in the UK. Ferrovial owns 25 percent of the group after a series of stake divestments to Universities Superannuation Scheme (8.65 percent), Qatar Holding (10.62 percent) and Alinda Capital Partners (5.88 percent).

StormHarbour, which launched in 2009, was recently sole arranger and lead manager for Energias de Portugal on a €450 million public securitisation, the largest transaction of its type in Portugal since the financial crisis.