Sirius tweaks its balance sheet


Sirius tweaks its balance sheet


Published Date: 2021-06-10 | Source: INCE|Community | Author: The Finance Ghost

Sirius tweaks its balance sheet

It's been a busy week for Sirius. I wrote a couple of days ago on Sirius' strong financial performance, a mark of success for the company's German-focused strategy.

The latest news is that Sirius is assessing the opportunity to issue senior unsecured bonds. These funding instruments rank highly in a liquidation scenario but are not secured by specific properties within the fund,

The company said that this is part of a broader strategy to achieve a balance between secured and unsecured debt. Specifically, the company wants more operational flexibility and a larger pool of "unencumbered assets" i.e. properties that are not pledged as security to banks under specific loans.

If the company goes ahead, the proceeds of the bond issue will be used to refinance secured debt (i.e. settle the other banks to a certain extent) and fund potential asset acquisitions.

To bring this example home, imagine you hold a portfolio of five properties. Instead of having five specific mortgages, it's possible to approach a bank and obtain funding based on the property portfolio as a whole. The funding comes in at senior level (so you cry before the bank does if everything is liquidated) but takes into account the portfolio as a whole rather than specific properties.

At this stage, Sirius is looking at raising €300 million and has appointed Deutsche Bank, HSBC and Morgan Stanley as Joint Bookrunners. Morgan Stanley is coordinating the logistics, which means the poor analyst at that bank is working even harder than the analysts at Deutsche and HSBC.

Sirius has been rated BBB: Stable by Fitch. This is the entry-level investment grade rating available from Fitch.


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