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Centrus advises Cross Keys Homes on £45m of retained bond issuance

In September 2014 Cross Keys issued £150m of 4.25% bonds due 2045 lead managed by Lloyds and RBS with Centrus acting as adviser. At the time of issue Cross Keys decided to retain an amount of £45m.

Earlier in 2016, Cross Keys decided to raise additional long dated finance to fund its ongoing capital investment programme and appointed Centrus to advise it on the issue and placement of the retained bonds. Following a selection process, Lloyds was chosen to act as bookrunner and an investor update together with net roadshow was announced on 23rd May.

Cross Keys wanted to ensure that liquidity was available to it as a backstop in the event that conditions in the bond market deteriorated and new issue terms became unattractive. As a result Centrus assisted Cross Keys negotiating terms for a standby short term bank facility which in the event was not required.

On the morning of 24th May, Lloyds invited investors to bid for up to the full amount of £45m of retained bonds. Following a strong response Cross Keys agreed to issue the full amount of £45m at a yield to maturity of 3.705% and a credit spread fixed at 139bps. Before the announcement of the proposed issue, Cross keys’ 2045 bond was trading at a bid spread of 145bps. Consequently, by pricing well inside the bid level, Cross Keys achieved a finely priced transaction and a very successful offering supported by long term sterling investors.