Summerset Group will sell up to $100 million of seven-year fixed-rate bonds as it cuts its reliance on bank debt.

The retirement village operator and developer announced its planned offer last week. At the time chair Rob Campbell said he was pleased the firm was considering another retail bond issue after raising $100 million in June 2017, with an oversubscription of 33.3 percent. The interest rate for those bonds – which will mature in July 2023 – was set at 4.78 percent per annum. They last traded at a yield of 3.7 percent.

The new issue will pay a minimum interest rate of 4.15 percent per annum and is expected to be priced at an indicative margin of 1.65 percent to 1.75 percent above the seven-year swap rate, which was recently at 2.53 percent. That implies the final rate will be set at 4.18 percent to 4.28 percent. The actual margin will be set on Sept. 14 after a bookbuild process. The bonds will be issued on Sept. 24.

Wellington-based Summerset had net debt of $364.5 million as at June 30, with $279.3 million drawn from its $500 million banking facility. The bank debt matures in two tranches: August 2020 and March 2022.

The firm has appointed ANZ Bank New Zealand as arranger, and ANZ, First NZ Capital Securities, Forsyth Barr and Hobson Wealth Partners as joint lead managers. There is no public pool for the bonds.

Summerset shares last traded at $7.60 and have risen 38 percent this year.

Sophie Boot is a reporter with BusinessDesk.

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