4 December 2013 – Euroweek.com
Global Switch Holdings, the data centre business owned by David and Simon Reuben, sold its first Stirling bond today, a nine year issue that prices more tightly than the issuer could have achieved in Euros, according to one of the leads.
The company, established in 1998, has nine data centres in Europe, Singapore and Sydney, with a total of 3.1m square feet (290,000 square metres) of space.
It launched its first bond, a 600m seven year issue, in 2001.
For its second deal, book runners Barclays, Credit Suisse, Deutche Bank, Goldman Sachs and HSBC took the company on a road show to both sterling and euro investors last week, to assess issuing opportunities.
“You’d think the pricing in Euros in the Intermediate part of the curve might be as good as sterling, but the sterling investor base has been starved of paper this year – though there’s been a bit more supply recently,” said a banker at one the leads. “There’s still a lot of money out there, especially for primary deals”.
The banker said UK investors were the most sophisticated when it came to property credits. “It’s an interesting name. This is a layered business with a covenant package that mirrors those of the property companies, on interest coverage, debt to assets and negative pledge – but also a successful operating business,” the banker said.
Global Switch, rated BBB/BBB, announced a £300m nine year bond this morning at initial price thoughts of 185bp-190bp over the 4% 2022 Gllt.
The book grew to £1bn, enabling the leads to price a £350m deal at 180bp.
“The they were able to come well inside Digital Reality is testament to the work they’ve done on the road and the fact that investors see it, operationally and from a diversity perspective, as a better credit,” said the banker.
The appeal of the new name for the sterling market helped demand for Global Switch – just as the large volume of paper that electrically and gas company SSE has issued in sterling meant that it was able get better pricing yesterday on a long eight year bond by going to Euros.
Nethertheless, four or five of the biggest investors in today’s deal, including both UK and German Investors, already held Global Switch’s euro bonds. “They all came in again for meaningful size, sp there was a high degree of retention from the existing investor base, while also building up from that base,” the banker said.
The bond tightened to 172bp on the break.