Bond issues by unrated corporates are not particularly common in Australia. FIIG Securities is doing its best to change this and has rolled out another unrated bond issue, this time for Impact Homes. The new issue is for $40 million of 5 year bonds paying an 850bps coupon. An additional $5 million worth of oversubscriptions will be accepted.
Borrowers seeking to diversify their funding away from the major banks can seek to tap the corporate bond market but it’s a more difficult prospect for companies that doesn’t carry a rating from a credit rating agency or operate under a continuous disclosure regime as would be the case for an ASX listed company.
In the case of the FIIG issues, FIIG issues its own credit assessment and regularly updates investors on the company’s financial position.
Before the Impact Homes deal was announced the previous FIIG issue was from Sunland Group in early November. Sunland, an ASX listed company, raised $40 million by way of a 5 year bond, although those bonds carried a 755bps coupon rather than the 850bps on the Impact Homes bonds.