Exclusive: Channel Tunnel rail link owners launch refinancing
The owners of the Channel Tunnel rail link, known as High Speed One (HS1), will launch a refinancing of its £1.5bn debt mountain, The Independent can reveal.
The Canadian consortium of Ontario Teachers' Pension Plan and Borealis Infrastructure is looking to take advantage of low repayment rates in the corporate-bond market, which has been on fire since the start of the year.
Ontario and Borealis bought HS1, which runs from St Pancras station in London until it starts going underground in Kent, for £2.1bn in 2010 with bank loans.
Swapping that debt for corporate bonds will save the Canadians money and give them a longer to repay the cash. It is understood that HS1's chief executive, Nicola Shaw, already refinanced about £500m late last year, but this comprehensive move could even see them make a small windfall.
Royal Bank of Scotland, one of the original lenders, is advising on the bond issue, the prospectus for which is expected to be sent out to potential investors this morning.
With more than two years of sound operational and financial figures, the bonds are expected to be snapped up quickly – vindication for the Canadians' decision to make such a high-profile purchase in the British infrastructure market.
This will also fuel government beliefs that wealthy overseas pension funds will be attracted to putting their money behind job-creating infrastructure projects. The Chancellor, George Osborne, has pinned his hopes on returning the economy to growth on building and maintaining roads, flood defences and waste facilities.
Since the new year investors have decided that they can no longer just sit on their money, so have poured cash into bonds out of fear that returns could shortly get even lower. This has led to a plethora of companies, such as the insurers AXA and Prudential, tapping the bond market for tens of billions of dollars this month.
The high-street fashion chain New Look was reported to have started a process to hire advisers to negotiate its debt pile of more than £1bn. Blackstone-owned Travelport, which processes online transactions for the travel industry, is also looking at renegotiating the terms of around £300m of debt so that they are less stringent, though it is not thought that the company is going down the corporate bond route.
However, there is a concern that these deals could herald a return to the days when companies' debt was not judged by their operational performance but simply the pre-crisis goal of investing for its own sake.
For example, many owners of private finance initiative projects, such as schools and hospitals, would look for peaks and troughs in the debt markets to refinance their money. They would often make small fortunes out of this, which did not necessarily reflect how well that crucial infrastructure was actually run.
Ontario Teachers, which also backs the Lotto operator Camelot, and Borealis hold the concession to operate, manage and maintain HS1 until December 2040.
- 1 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 2 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 3 Oil tanker with $100 million cargo goes missing off Texas coast
- 4 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 5 Medina: Saudis take a bulldozer to Islam's history
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
Brother and sister, Christopher Buckner and Timothy Savoy, arrested for 'committing incest after watching 'The Notebook''
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
- < Previous
- Next >
iJobs Money & Business
£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...
£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...
£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...
£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...