Transurban
Australian Refinancing Deal of the Year 2002
Transurban Melbourne CityLink refinancing
The A$2.2 billion ABN Amro-arranged Melbourne CityLink refinancing demonstrated the considerable merits of a return to the market post project completion. The financing margin in the original deal was around 1.5%. The quasi corporate refinacing came in at less than half the original with an average margin of 53bp.
The debt package is split into a A$1.19 capital markets issue and a A$1.93 bank debt facility. The split allowed project sponsor Transurban Infrastructure Developments to spread its maturity profile while taking advantage of the differences in pricing and flexibility of terms across the two markets.
But pricing and tenor aside, Transurban achieved a number of firsts. The deal was Australia's first nominal toll road bond and the largest single corporate bond issue for an Australian infrastructure asset to date. Furthermore, it constitutes Australia's first fully callable corporate bond (post three years).
The Transurban concession runs until 2034. The road connects three of Melbourne's freeways and arterial road networks and includes a twin-tower bridge over the docklands and two tunnels under inner-city parkland and the Yarra river.
The rationale for refinancing was that the road had been open for almost a year and ramp up was virtually complete. With an established traffic flow and proven toll technology (the project was the first to use multi-lane tolling technology) , Transurban wanted to restructure its borrowing and free up cash for other projects.
The original financing in 1996 was a limited recourse facility. The refinancing took the form a quasi-corporate deal, bringing much of the original debt back on balance sheet at much lower margins.
Response to thin sub-underwriting margins on the syndicated debt was initially cool. Mandated arranger ABN Amro eventually pulled in Westpac as arranger and HSBC, ING and China Construction Bank (Hong Kong) as lead managers after roadshows in Melbourne and Singapore.
The syndicated bank debt breaks down as follows: a A$510 million five-year term loan; a A$170 million three-year term loan; A$30 million 364-day working capital facility; a A$50 million standby facility; a A$20 million letter of credit; Pricing on the 364-day and three-year facilities is 55bp over BBSY with the five-year margin coming in at 60bp over BBSY.
An undrawn A$150 million one-year subordinated debt facility (rated BBB+ by S&P and provided by ABN Amro) was also arranged which acts as an equity bridge for Transurban to fund new projects or acquisitions.
Transurban's bonds were greeted more enthusiam and the original size of the bond placement was increased to accomodate demand.
The notes break down into six tranches ? two unwrapped and four wrapped. A$260 million of fixed rate unwrapped paper with a three-year bullet yielding 60bp over three-year swap rate on a coupon of 6.25%. The A$90 million unwrapped floating rate tranche with three-year tenor also came in at 60bp over the bank bill swap rate. Both were rated A-/A3 by Standard & Poor's and Moody's respectively.
The remaining four tranches were all wrapped by monoline MBIA. The triple-A rated paper comprised A$175 million of three-year fixed rate notes yielding 35bp over the three year swap rate on a 6.25% coupon; A$65 million of three-year floating rate notes at 35bp over swap; A$240 million of five-year floating rate notes with a call option in three years at 46bp over the bank bill swap rate; and finally A$360 million of seven-year floating rate notes with a call option in three years yielding 50bp over bank bill swap.
ABN Amro acted as bond bookrunner, with Westpac as lead manager on the A$260 million unwrapped tranche and SG Asia lead managing the wrapped.
Proceeds from the bond issue took out a 180-day A$1 billion bridge loan arranged and underwritten by ABN Amro in May. In addition, due to the upsizing of the amount of bonds, the A$170 million three-year tranche of the syndicated debt was repaid and cancelled.
Much of the success of the Transurban refinancing correlates to the success of the project itself. After some early teething troubles the project was runnning at 99% efficiency at time of refinancing. A solid credit rating meant Transurban could cut a better deal and attract a wider range of investors. Similarly, the sponsor was only looking for a maximum of five-year debt (original debt was construction plus 10 years) which is reflected in the aggressive pricing.
Nevertheless, Transurban is as complicated as it is cheap. The combined debt and bond refinancing includes interest rate swaps, working capital facilities, senior undrawn and subordinated undrawn facilties. And given the deal has succesfully tested new ground, a number of Australian road deals that are coming up for refinancing in the next two years will likely take the bond route.
Transurban Finance
Status: Funded 28 September 2002
Total project cost: A$2.2 billion
Description: Refinancing for the Melbourne CityLink concession
Sponsor: Transurban Infrastructure Developments
Financial advisor to sponsor: Macquarie Bank
Bank debt: A$1.93 billion
Debt pricing: 55bp 3-year; 60bp 5-year
Mandated arranger: ABN Amro
Arranger: Westpac
Lead managers: ING; HSBC Bank Australia; China Construction Bank.
Bond debt: A$1.19 billion
Bond yield: 60bp unwrapped; 35bp-50bp wrapped
Bookrunner: ABN Amro Australia
Joint lead managers: SG Asia; Westpac
Co-manager: CIBC World Markets
Legal counsel to sponsor: Freehills
Legal counsel to lenders: Allens Arthur Robinson
Back to contents
Transurban Melbourne CityLink refinancing
The A$2.2 billion ABN Amro-arranged Melbourne CityLink refinancing demonstrated the considerable merits of a return to the market post project completion. The financing margin in the original deal was around 1.5%. The quasi corporate refinacing came in at less than half the original with an average margin of 53bp.
The debt package is split into a A$1.19 capital markets issue and a A$1.93 bank debt facility. The split allowed project sponsor Transurban Infrastructure Developments to spread its maturity profile while taking advantage of the differences in pricing and flexibility of terms across the two markets.
But pricing and tenor aside, Transurban achieved a number of firsts. The deal was Australia's first nominal toll road bond and the largest single corporate bond issue for an Australian infrastructure asset to date. Furthermore, it constitutes Australia's first fully callable corporate bond (post three years).
The Transurban concession runs until 2034. The road connects three of Melbourne's freeways and arterial road networks and includes a twin-tower bridge over the docklands and two tunnels under inner-city parkland and the Yarra river.
The rationale for refinancing was that the road had been open for almost a year and ramp up was virtually complete. With an established traffic flow and proven toll technology (the project was the first to use multi-lane tolling technology) , Transurban wanted to restructure its borrowing and free up cash for other projects.
The original financing in 1996 was a limited recourse facility. The refinancing took the form a quasi-corporate deal, bringing much of the original debt back on balance sheet at much lower margins.
Response to thin sub-underwriting margins on the syndicated debt was initially cool. Mandated arranger ABN Amro eventually pulled in Westpac as arranger and HSBC, ING and China Construction Bank (Hong Kong) as lead managers after roadshows in Melbourne and Singapore.
The syndicated bank debt breaks down as follows: a A$510 million five-year term loan; a A$170 million three-year term loan; A$30 million 364-day working capital facility; a A$50 million standby facility; a A$20 million letter of credit; Pricing on the 364-day and three-year facilities is 55bp over BBSY with the five-year margin coming in at 60bp over BBSY.
An undrawn A$150 million one-year subordinated debt facility (rated BBB+ by S&P and provided by ABN Amro) was also arranged which acts as an equity bridge for Transurban to fund new projects or acquisitions.
Transurban's bonds were greeted more enthusiam and the original size of the bond placement was increased to accomodate demand.
The notes break down into six tranches ? two unwrapped and four wrapped. A$260 million of fixed rate unwrapped paper with a three-year bullet yielding 60bp over three-year swap rate on a coupon of 6.25%. The A$90 million unwrapped floating rate tranche with three-year tenor also came in at 60bp over the bank bill swap rate. Both were rated A-/A3 by Standard & Poor's and Moody's respectively.
The remaining four tranches were all wrapped by monoline MBIA. The triple-A rated paper comprised A$175 million of three-year fixed rate notes yielding 35bp over the three year swap rate on a 6.25% coupon; A$65 million of three-year floating rate notes at 35bp over swap; A$240 million of five-year floating rate notes with a call option in three years at 46bp over the bank bill swap rate; and finally A$360 million of seven-year floating rate notes with a call option in three years yielding 50bp over bank bill swap.
ABN Amro acted as bond bookrunner, with Westpac as lead manager on the A$260 million unwrapped tranche and SG Asia lead managing the wrapped.
Proceeds from the bond issue took out a 180-day A$1 billion bridge loan arranged and underwritten by ABN Amro in May. In addition, due to the upsizing of the amount of bonds, the A$170 million three-year tranche of the syndicated debt was repaid and cancelled.
Much of the success of the Transurban refinancing correlates to the success of the project itself. After some early teething troubles the project was runnning at 99% efficiency at time of refinancing. A solid credit rating meant Transurban could cut a better deal and attract a wider range of investors. Similarly, the sponsor was only looking for a maximum of five-year debt (original debt was construction plus 10 years) which is reflected in the aggressive pricing.
Nevertheless, Transurban is as complicated as it is cheap. The combined debt and bond refinancing includes interest rate swaps, working capital facilities, senior undrawn and subordinated undrawn facilties. And given the deal has succesfully tested new ground, a number of Australian road deals that are coming up for refinancing in the next two years will likely take the bond route.
Transurban Finance
Status: Funded 28 September 2002
Total project cost: A$2.2 billion
Description: Refinancing for the Melbourne CityLink concession
Sponsor: Transurban Infrastructure Developments
Financial advisor to sponsor: Macquarie Bank
Bank debt: A$1.93 billion
Debt pricing: 55bp 3-year; 60bp 5-year
Mandated arranger: ABN Amro
Arranger: Westpac
Lead managers: ING; HSBC Bank Australia; China Construction Bank.
Bond debt: A$1.19 billion
Bond yield: 60bp unwrapped; 35bp-50bp wrapped
Bookrunner: ABN Amro Australia
Joint lead managers: SG Asia; Westpac
Co-manager: CIBC World Markets
Legal counsel to sponsor: Freehills
Legal counsel to lenders: Allens Arthur Robinson
Back to contents
Request a Demo
Interested in IJGlobal? Request a demo to discuss a trial with a member of our team. Talk to the team to explore the value of our asset and transaction databases, our market-leading news, league tables and much more.