Capitol Health is about the join the ranks of the increasing number of issuers of corporate bonds in the local bond market. Typically the bond market in Australian has been the preserve of large corporates but in recent years more and more bond issues have been made by companies such as Capitol Health. The last unrated corporate to issue bonds into the domestic market was Impact Homes. In February it issued $45 million of 8.50% bonds and, while they were not vanilla bonds, they offer a useful comparison for a bond issue such as the one coming from Capitol.
Capitol plans to raise up to $50 million by issuing unlisted notes to professional and sophisticated investors. The notes will mature in 4 years but will be callable after two years and every six months thereafter. Annual interest will be payable in two instalment per year (that is, semi-annually) and will total 8.25% of the face value. Once all other terms and conditions have been finalised an Information Memorandum will be lodged with the ASX. NAB Capital is the sole arranger for the issuer.
This capital raising was first flagged in February and the proceeds will be used to replace bank debt, so debts levels will not change as a result of the new debt securities. Capitol Health chief John Conidi said the bond issue would diversify Capitol’s debt sources while lengthening the debt maturity profile.