Deal completed faster than expected

Broking group Towergate has priced its £520m, two-part bond offering.

The yield for the £230m senior secured portion of the offering has been fixed at 8.5%, while the £290m senior unsecured portion’s yield has been fixed at 10.5%. The bond was placed solely in sterling, as predicted by Insurance Times earlier this week.

This is an improvement over early indications reported by newswire Dow Jones, which suggested an 8.75% yield for the secured tier and 10.75% for the unsecured tier.

A lower yield is better because it means Towergate will have to pay a lower rate to bondholders.

Insurance Times understands the pricing was completed in four days, faster than the expected 10-12 days.

It is also understood that Towergate has secured better terms than if it had gone ahead with its abortive £665m bond issue last May. Back then the broker could have expected a yield of between 9.5% and 10% for the secured portion of the issue.

Towergate pulled the bond in May because it was not happy with the terms it got from the market.

Towergate has cut the secured part of the bond portion of its refinancing package to £230m from £280m in favour of the loan part because investor demand for the loan portion allowed this. A greater weighting towards loans is better for Towergate because the payments are lower than for the bonds.

The two parts of the loan portion are priced at 4.5% over the London interbank offered rate (Libor) and 5% over Libor respectively.