Transurban raises maple market issuance

06 November 2018 - 12:00 am UTC

Transurban has raised CAD 650m (USD 495.64m) on the Canadian bond market to provide a “balance sheet hedge” against its investment in Montreal’s A25 toll road.

The senior secured deal was priced on 5 November and settlement is expected on 13 November, according to a securities exchange statement. A spokesperson for Transurban confirmed that the issuance will specifically settle the CAD/AUD FX swap used to fund the firm’s acquisition, due to mature in December 2018.

The bond was raised under Transurban’s Euro Medium Term Note programme. It has a tenor of 10 years, maturing in November 2028. The issuance will rank equally with the company’s other senior secured debt facilities.

CIBC World Markets Inc and Scotia Capital Inc acted as Joint Lead Arrangers for the transaction.

According to Transurban’s annual report for the year to 30 June, it had AUD 6.1bn of corporate debt net of capitalised borrowing costs. It has one other Canadian note maturing in March 2019 valued at AUD 255m in its accounts. Total non-recourse debt for its assets was reported at AUD 9.3bn. This will rise with the firm’s recent acquisition of a 51% stake in Sydney Motorway Corporation, the company delivering Sydney’s WestConnex motorway.

Transurban’s CFO, Adam Watson, said the company sees the Canadian market as an attractive source of diversified funding “to support our development pipeline and capital management strategy.”

Inframation reported in September that the firm seeks to refinance a CAD 383m credit facility associated with the asset and that the company tapped Citi to lead the private placement. It is unclear whether this process will continue given the new issuance. However, while the newly secured bond covers part of the acquisition debt, a spokesperson for Transurban reiterated that it has been issued at corporate – not project – level.

Transurban reached financial close on its acquisition of the A25 Montreal toll road from Macquarie Infrastructure Partners (MIP) in June this year. The bid comprised CAD 840m (USD 649.5m) of equity, a transaction fee of CAD 18m and the deal assumed CAD 383m in senior debt.

The A25 has been operating since May 2011. Its development involved the construction of a 7.2km, four-lane stretch of autoroute between Henri-Bourassa Bolevard in Montreal and autoroute 440 in Laval. It also included a 1.2km, six-lane bridge across Rivière des Prairies.

The A25 concession expires in September 2042. Revenue includes an availability payment plus a guaranteed minimum toll income.
 

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