SEEK Ltd, the well-known employment website business, had made its bond market debut with the issue of $175 million worth of floating rate notes. Initially only $100 million had been sought but the issue was upsized after “strong support from investors”, according to the company’s chief financial officer Geoff Roberts. He also noted how the note issue would diversify SEEK’s sources of finance and extend the company’s average debt tenor.
Interest is payable at 3 month BBSW +230bps which, at the current BBSW rate of 1.78%, is equivalent to 4.08%. The notes will mature in 2022 and rank equally with SEEK’s existing senior unsecured debt.
SEEK’s senior debt is unrated by the ratings agencies such S&P Global Ratings, Moody’s Investor Services or Fitch Ratings. This issue is another in what appears to be a growing trend in Australia for corporates without credit ratings to access local debt markets. IMF Bentham, StockCo, Qube, TFS, CML Group, Capitol Health and Healthscope have all issued bonds within the last twelve months and none of them have credit ratings.
While this issue is SEEK’s debut debt security, it is not SEEK’s first attempt. In June 2012, SEEK sought to raise $125 million and it had even made available a prospectus to issue fixed-rate five year subordinated notes which were to be listed on the ASX. The issue was subsequently benched just over one week later when SEEK released a statement to the ASX which stated “it would not achieve acceptable terms.”
At the end of June 2016, $826.9 million of SEEK’s total available facilities of $1138 million had been drawn down but by 31 December 2016, this had risen to $893.8 million out of $1131.3 million.