The fact that, despite a substantial widening in credit spreads over recent weeks, TCL have been able to place over 600m$ of long-term debt (14 years average maturity) at a yield below the Group’s current average cost of funding (~4.8%) speaks volumes as to the perceived quality of TCL’s assets.
For those who are not familiar with it, the US Private Placement market has US insurance companies as main active investors; generally (but not in this instance, clearly), it demands a small yield premium to the public bond market.
By refinancing existing bank debt with a USPP, TCL are also (self-evidently) further reducing the proportion of bank credit lines in their debt mix, which as of June 30th was in the region of 15% (see chart below).
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