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…
25 Nov 2022
Share tips of the week – 25 November
Share tips

Share tips of the week – 25 November

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
25 Nov 2022
Investing in a recession: 5 moves investors should make now
Investment strategy

Investing in a recession: 5 moves investors should make now

As we enter a recession, here’s what investors should do with their portfolios.
23 Nov 2022
It’s time to focus on Fuller’s
Share tips

It’s time to focus on Fuller’s

The pub sector has had a torrid two years, but this group is resilient and poised to prosper. We take a closer look at Fuller’s.
21 Nov 2022

Most Popular

Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
29 Nov 2022
Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Best regular savings accounts – November 2022
Savings

Best regular savings accounts – November 2022

You can earn an attractive rate on the best regular savings accounts. We tell you the best on the market to take advantage of right now
29 Nov 2022