Credit Analyst, BondAdviser

Jack Pobjoy

Credit Analyst

Australian bonds & fixed income research

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Credit

On the 17th of April 2018, <a href="https://www.smartkarma.com/entities/26940/insights" target="_blank">Afterpay Touch Group Limited (ASX: APT)</a> launched an offer for Afterpay Touch Notes. The Notes are expected to be issued on the 26th of April 2018 and the offer is expected to raise $40 million (with the ability to take oversubscriptions). The proceeds will be used to support the growth trajectory of the APT receivables book. These securities are sold to wholesale investors only (no Prospectus being issued) and are not listed on the Australian Securities Exchange (ASX).These securities are structured as direct, senior unsecured notes and interest payments are non-discretionary, fixed rate (coupon rate guided to be set between 7.25 - 7.50% p.a.) and paid on a semi-annual basis. Although the notes will be issued from the non-operating parent entity, a guarantee is given by the Group’s material domestic operating subsidiaries. The Guarantors must comprise at least 90% of Australian-generated EBITDA of the Group at all times.APT has the right but not the obligation to redeem some or all of the notes prior to maturity on the 27th of April 2020 at 102.5% of par value and each interest payment date thereafter until the 27th of April 2021 where the redemption price will become 101% of par value at each interest payment date until legal final maturity (27th of April 2022). Noteholders have the right to early redemption, if a Change of Control Event occurs, at 101% of par value.Investors are protected by a series of covenants including a negative pledge (subject to a collective permitted secured security interest of $1 million for the Issuer and Guarantors), minimum interest cover ratio of 2.00x (first test date on 31 December 2018) and a dividend stopper.

On the 17th of April 2018, Afterpay Touch Group Limited (ASX: APT) launched an offer for Afterpay Touch Notes. The Notes are expected to be issued on the 26th of April 2018 and the offer is expected to raise $40 million (with the ability to take oversubscriptions). The proceeds will be used to support the growth trajectory of the APT receivables book. These securities are sold to wholesale investors only (no Prospectus being issued) and are not listed on the Australian Securities Exchange (ASX).These securities are structured as direct, senior unsecured notes and interest payments are non-discretionary, fixed rate (coupon rate guided to be set between 7.25 - 7.50% p.a.) and paid on a semi-annual basis. Although the notes will be issued from the non-operating parent entity, a guarantee is given by the Group’s material domestic operating subsidiaries. The Guarantors must comprise at least 90% of Australian-generated EBITDA of the Group at all times.APT has the right but not the obligation to redeem some or all of the notes prior to maturity on the 27th of April 2020 at 102.5% of par value and each interest payment date thereafter until the 27th of April 2021 where the redemption price will become 101% of par value at each interest payment date until legal final maturity (27th of April 2022). Noteholders have the right to early redemption, if a Change of Control Event occurs, at 101% of par value.Investors are protected by a series of covenants including a negative pledge (subject to a collective permitted secured security interest of $1 million for the Issuer and Guarantors), minimum interest cover ratio of 2.00x (first test date on 31 December 2018) and a dividend stopper.

Australian Credit: Afterpay Touch Launches Its Inaugural High-Yield Bond Issue