Grafton bond set to raise €50m

Grafton Group could be set to raise up to €50m in new financing via the issuance of a new seven- year retail bond.

The builders merchants/DIY group has a strong balance sheet, shrinking debt levels and a loan maturity window stretching out to 2016/2017; but has embarked on a maiden bond issue in order to further diversify its financing mix.

“The group is pleased to launch its first listed retail bond, as part of its strategy of diversifying its sources of funding and extending the maturity profile of its debt,” said group chief executive Gavin Slark.

Grafton didn’t comment on the amount of new financing it thinks it could raise from this move, but industry sources suggest the group could realise anything up to €50m in fresh funding.

The new sterling retail bonds are being issued by Grafton’s subsidiary, Grafton Group Finance and are guaranteed by the group itself.

The bonds offer a fixed interest rate of 5.5%, per year, and will be payable semi-annually to holders on Jan 15 and Jul 15 each year, up to maturity in 2020.

They went on sale yesterday and will remain available from brokers until noon on Jul 8.

The minimum initial investment, per buyer, is £2,000 and the bonds can be bought and sold at their face value of £1,000 plus increments of £100 in excess of £1,000 thereafter.

The issue is being managed by Investec Bank and the bonds will be available to purchase from a number of British-based stockbrokers, with Goodbody Stockbrokers acting as chief agent in Ireland.

The bulk of Grafton’s existing €202m (as of the end of 2012) net debt is not due to mature until 2016; but that debt has steadily come down in each of the last six years — going from €550m to €202m between 2007 and the end of last year.