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Affinity Water exchanges 3.625% 2022 bonds for new 3.278% bonds due 2042

On 9th August 2016, Affinity Water  announced an invitation to holders of its £80m 3.625% bonds due 2022 to exchange their bonds for new bonds due 2042. This followed the AW’s board decision to lengthen the maturity profile of its debt and to take advantage of low long term interest rates.

Par-for-par exchange

Affinity Water (AW) decided to offer a par-for-par exchange and holders of Affinity Water (AW) 2022 bond were invited to exchange any or all of their bonds at an exchange spread of 90 basis points for new 2042 bonds at a coupon to be fixed at a spread of 125bps over the 2042 reference Gilt. In the Exchange Offer Memorandum, AW announced that it had received indications from one investor representing approximately 35% of the outstanding nominal amount of the 2022 bonds that it intended to exchange its bonds and this was a significant factor is AW’s decision to proceed with the exchange offer.

The Exchange Offer expired on 17th August and the following day, AW announced that £65.796m nominal of the 2022 bonds had agreed to exchange into the new 2042 bonds which were priced at a coupon of 3.278%. AW decided to issue a further nominal amount of £19.204m 2042 bonds in order to create a new 2042 bond issue of £85m.

Financial Advise

Centrus provided financial advice to AW involving the analysis of a range of options for achieving a lengthening of the company’s debt maturity profile. In addition, Centrus provided advice on the strategy for an approach to the single largest holder of 2022 bonds and bond investor engagement.


Partner Robert St John who led the Centrus team commented AW  was faced with a range of structures by which it could have extended its debt maturity profile. Taking onto account bond holder preferences, AW’s objectives and accounting considerations, it became clear that an Exchange Offer was the best structure to adopt. Having secured support from the largest 2022 bondholder for the proposed terms, AW had the confidence to proceed with a formal Exchange Offer and achieve a very successful outcome.