Center Parcs (UK) tapped into a quiet pre-Easter window on Wednesday with an evenly split £648m dual-tranche Class A offering that gained a solid response.
Final terms on the leisure business' August 2027 Class A6 notes and August 2031 A7s were mid-Gilts plus 260bp and 280bp, respectively. Both tranches landed flat to fair value, according to a lead. Initial price thoughts were in the Gilts plus areas of 290bp and 310bp.
The lead said the deal gained a strong response given it is a brand name with which people are familiar. Combined books were in excess of £1.77bn, after peaking at £2bn at guidance. Final demand for the A6 and A7 notes was £870m and £900m, respectively.
Center Parcs is also a rare and non-utility name, offering appealing yield levels, as the whole business securitisation is not a structure that everyone can buy and naturally has a smaller pool of investors, the banker said.
Fitch wrote that Center Parcs has no direct competitors and the CP brand is fairly strong, with the company benefiting from other brands operated on a concession basis at its sites.
The bonds are the only high-grade sterling transaction from a corporate borrower so far this week. They have expected ratings of BBB/BBB (S&P/Fitch).
CP only issued Class B notes, rated B–/B (S&P/Fitch), in recent years, making the new Class A offering its first investment-grade-rated trade since 2018.
While the company showcased its ESG commitments in its roadshow presentation, it recently had to scrap plans for a new holiday village in West Sussex after facing protests from wildlife campaigners. Environmentalists have said the site would destroy the habitats of rare birds.
There were questions around the company's expansion plans but nothing that could potentially derail the deal, the lead said, prior to the book open. "Investors just can't get out of their beds without asking these ESG questions," he said.
Barclays was the sole global coordinator and active bookrunner with HSBC.
The proceeds will be used to refinance its £440m A2 notes as well as for general corporate purposes.
Financing entity CPUK Finance is the issuer. It is a corporate securitisation, where the collateral is in the form of secured loans made by the issuer to the borrowers. The borrowers' primary source of funds for ongoing payments are cashflows from the operations of a portfolio of five short-stay holiday villages located in the UK.