The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Real estate: Sainsbury CMBS offers food for thought to other troubled credits

More opco/propco deals are likely given rising real estate values and investor interest in secured debt.

As the corporate credit rating of UK supermarket group J Sainsbury teeters on the edge of a drop below investment grade, the secured refinancing of half of its property portfolio could prove to be a successful defensive move against further downgrades.

Other companies in similar rating difficulties but with large portfolios of unpledged assets and a need to placate their shareholders will be watching Sainsbury’s activities with great interest. The company announced plans at the end of February to redeem all of its £1.7 billion ($3 billion) unsecured debt via a £2 billion commercial mortgage-backed securitization, with the net proceeds of the issue being injected into its pension fund. The bonds will be issued via two transactions, one fixed rate and one floating rate. The £1.2 billion 12-year FRN Eddystone Finance structure is backed by 75 supermarkets and the £868 billion 25-year fixed-rate Longstone Finance deal by 52 supermarkets – in total these comprise half of the company’s property portfolio.

STORE OF TROUBLE
Sainsbury’s five-yr CDS spreads
Source: Morgan Stanley

News of the restructuring drew immediate parallels with Land Securities’ 2004 debt refinancing.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree