Provident Financial plc (‘PFG’ or ‘the Group’), the leading provider of credit products to consumers who are underserved by mainstream banks, publishes an update to the market today following the successful pricing of the Group’s first Tier 2 subordinated bond since 2005 and the partial tender of its 2023 Senior Bonds.
Tier 2 Bond pricing
PFG announces today that it has successfully priced its first subordinated debt capital to the external markets since 2005. The pricing is for a £200m Tier 2 bond in pound sterling with a 10.25 year maturity, callable after 5.25 years, and a coupon of 8.875% reflecting the strong interest received from the market and the Group’s improving credit narrative. The bond is being priced with an expected rating of B+ (Fitch). The pricing of the bonds represents an important additional step for the Group as it seeks to diversify its sources of capital and funding, and to finance future growth opportunities.
Partial tender process
A partial tender process for the Group’s 2023 Senior Bonds, with an 8.25% coupon, was launched by PFG. The Group successfully repurchased £71.5m of its £175m outstanding 2023 Senior Bonds, which do not count towards the Group’s regulatory capital. This is the second time that PFG has successfully launched a partial tender of these bonds, the last time being August 2020 for £75.0m.
Neeraj Kapur, Chief Finance Officer, commented:
“I am pleased to announce the pricing of PFG’s first Tier 2 capital issuance since 2005, alongside a buyback of some of our 2023 Senior Bonds, as we continue to target efficiencies across our capital and funding structure. Following strong demand from investors, we have priced £200m of Tier 2 subordinated debt capital, in a typical form under UK regulation, with a 10.25 year maturity, callable at 5.25 years, and a coupon of 8.875%. The strong support we received from participating investors was excellent and a real endorsement of our strategic objectives moving forwards. In combination with other debt refinancing activities that have been executed since our half year results, this places the Group in a very strong capital and liquidity position.”
Analysts and shareholders:
Owen Jones, Group Head of Investor Relations
Richard King, Provident Financial
Nick Cosgrove/Simone Selzer, Brunswick