Absa Capital, the investment banking division of Absa Bank Limited (Absa), has successfully completed the first public corporate bond switch auction in the South African market for Barloworld Limited (Barloworld).
As sole arranger, Absa Capital, successfully switched a portion of Barloworld's BAW1 bonds (maturing July 2011) into new longer-term bonds, and simultaneously issued new bonds to a total deal size of R1 billion.
Prasanna Nana, Head of the South African Debt Capital Markets team at Absa Capital, said: "We are delighted that Barloworld chose Absa Capital to assist them with lengthening their maturity profile through this market developing transaction."
Don Wilson, Finance Director at Barloworld, said: “The goal of the transaction was to switch a maximum of R500 million of BAW1 bonds - R555 million were offered in the auction - and issue at least R750 million of new three, four and seven-year notes, in order to lengthen and distribute the Barloworld maturity profile as well as to rebalance the mix between our short-term and long-term debt. We believe we have managed to achieve this.”
Nana said that while R555 million of BAW1 bonds were offered in the switch, the dynamics between the significant demand in the new notes and the offers in the switch auction resulted in Barloworld electing to only switch R230 million of the BAW1 notes and issuing R770 million of new notes.
The total book had a bid cover ratio of 2.3x (including the switch). The final transaction comprised:
- R230 million BAW1 switched into three-year notes (R146 million) and seven-year notes (R84 million); and
- A total of R770 million new bonds across three, four and seven years.
Note to the editor:
About Absa Capital Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays Capital, is a leading South African investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.
Absa Capital was rated the “Best Primary Markets House” in the 2009 JSE Spire Awards – one of nine first place rankings the firm secured at the awards.
FD Media & Investor Relations
Wendy du Plessis
+27 11 214 2418
+27 83 949 6713
For further information contact:
Marketing and Corporate Communications
+27 11 895 6695
+27 79 695 9798