Barratt slashes borrowing costs with major refinancing

Housebuilder Barratt Developments has completed a major refinancing package ahead of schedule to greatly reduce its borrowing costs.

Housebuilder Barratt Developments has completed a major refinancing package ahead of schedule to greatly reduce its borrowing costs.

The refinancing trimmed Barratt's underlying interest rates from 7.0% to 4.5%.

Due to its "much improved financial performance", the group had made early repayments of its historic high-cost private placement notes, replaced by new borrowing facilities of around £1.5bn at more attractive terms over periods of up to eight years.

The refinancing provides the group with around £850m of committed facilities to June 2016 and £650m to May 2018, with some facilities extending as far as 2021.

Future facilities include a new £700m committed bank revolving credit facility, reducing to £550m in June 2016 to reflect the group's reduced borrowing requirements, and maturing in May 2018.

Barratt will also retain $80m of private placement notes that were issued in May 2011 and mature in August 2017, swapped into sterling equating to a £48m fixed-rate loan, and retain the £100m term loan from The Prudential-M&G UK Companies Financing Fund that was drawn in July 2011, of which 25% is scheduled to be repaid in 2019, 25% in 2020 and the balance in 2021.

Barratt also raised £34m by monetising part of its shared equity portfolio.

Group Finance Director David Thomas explained the monetisation of the shared equity portfolio represented a further measure to improve profitability, reduce net debt and increase return on capital employed.

He added the fact the group had been able to conclude the monetisation deal now was "further evidence of the improving outlook for the sector", while the refinancing package reflected Barratt's improved financial position and "the significant progress we've made towards our target of zero net debt as at June 30th 2015."

As it moves towards that target, the group expects to have net debt of £100m by June 30th, down from £168m a year before.

Shares in Barratt Developments were up 1.4% at 315.74p at 08:55 on Wednesday.

OH

Recommended

Best junior stocks and shares ISA platforms
Isas

Best junior stocks and shares ISA platforms

A junior stocks and shares ISA is a great way to save for your child tax-efficiently. But it can be confusing deciding which investment platform to ch…
28 Mar 2023
The top funds to invest in
Funds

The top funds to invest in

As market volatility and recessionary fears continue, here are the most popular funds, stocks and trusts investors are putting their money into
2 Mar 2023
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
27 Feb 2023
The outlook for Shell shares is mixed, despite bumper profits
Energy stocks

The outlook for Shell shares is mixed, despite bumper profits

With profits surging, it looks as if Shell is on a roll, but the company’s growth from here is hard to see as Rupert Hargreaves explains.
6 Feb 2023

Most Popular

Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

Ofgem’s price cap is now predicted to fall to around £2,000, based on average typical use, for the first time since 2022. We have all the details.
31 Mar 2023
Best areas for buy-to-let in the UK
Buy to let

Best areas for buy-to-let in the UK

If you’re thinking of getting a buy-to-let property you’ll want to know the areas in the country with the highest rental yields
29 Mar 2023
The best one-year fixed savings accounts - March 2023
Savings

The best one-year fixed savings accounts - March 2023

Earn over 4% on one-year fixed savings accounts.
30 Mar 2023