Witan fixes £30m debt for 37 years – Witan Investment Trust plc has today agreed to issue a GBP30m fixed rate 37 year secured private placement note at a coupon of 2.74%. The purpose of this transaction is to obtain fixed rate long dated Sterling denominated financing at a pricing level that the company considers attractive, and is expected to enhance long term investment performance. There has been no change in the company’s policy on gearing, as set out on pages 13 & 14 of the 2016 Annual Report.
The funding date is expected to be 1st November 2017 with interest payable semi-annually. The principal repayment date will be 1st November 2054. Total structural borrowings including the Note will increase from GBP142m to GBP172m following completion of this transaction. In the near-term, it is expected that the proceeds will be mainly used to repay short-term borrowings (currently GBP102m).
The weighted average interest payable on the company’s structural borrowings will decrease from 4.6% to 4.3% as at the date of funding.
QuotedData comment: £30m is a relatively small amount in the context of a fund with net assets of about £1.9bn but 37 years may be a record length for long-term borrowings in the sector. Witan’s manager may have been mindful of the comment he made post the recent UK election result on long term borrowing rates: “Although the Bank of England is likely to err on the side of loose policy, it seems likely that fiscal policy will be looser than under a strong government and weaker sterling is likely to keep upward pressure on inflation relative to rates in other countries. We have become used to bond yields remaining low despite huge increases in government borrowing and fluctuations in inflation. As the World’s central banks show signs of taking their foot off the monetary accelerator and gently applying the brakes this might change.”
WTAN : Witan fixes £30m debt for 37 years