Last week, Vesteda issued € 400 million of AAA-rated bonds, partly to refinance existing debt. Deutsche Bank acted as sole bookrunner for Vesteda, with € 4 billion in assets the largest private investor in residential real estate in The Netherlands and one of Europe´s largest multifamily housing companies.
Vesteda chose to refinance in the CMBS market (part of the fixed-income capital markets) because it could access cheaper financing than through bank credit or mortgage loans.
The transaction follows Vesteda´s inaugural € 1.4 billion AAA-rated bonds issued and lead-managed by Deutsche Bank in 2002. By issuing a new tranche of bonds with a 3-year maturity, Vesteda´s financing structure will mature on a roll-over basis over the next five years, thus minimizing its refinancing risk. Vesteda´s new bond issue was priced at 0.18% over 3-month EURIBOR, which is presently just over 2%. Vesteda also decided to manage the variable interest rate on the new bonds with a cap that provides a guarantee against rising EURIBOR.
Vesteda achieved several major objectives with these bond issues: it secured long-term funding at very low spreads over historically low interest rates, while securing the flexibility to manage its business; it also accessed a wide group of debt investors: banks, funds and insurance companies from across Europe, many of which participated in the original transaction. The deal was oversubscribed.
Source: Deutsche Bank