Global Switch launches inaugural bond issue
Global Switch Holdings Limited ("Global Switch"), the leading wholesale carrier neutral data centre owner and operator in Europe and Asia-Pacific and rated BBB by Fitch and Baa3 by Moody's, has launched its inaugural bond transaction.
Proceeds of the transaction will be used to pay off existing inter group indebtedness. The new EUR 600 million benchmark matures on April 18th 2018, pays a coupon of 5.5% and was priced at mid-swaps +207bp, equivalent to DBR 4.00% Jan 2018 +240.7bp.
Joint bookrunners were Barclays Capital, Credit Suisse, Deutsche Bank, HSBC.
John Corcoran, Executive Chairman, Global Switch, said "we were delighted with the strong investor interest shown in Global Switch with the issue being substantially over-subscribed, giving a clear endorsement of our business model and financial standing."
Background to Global Switch
- Global Switch, established in 1998, is the leading wholesale carrier neutral data centre owner and operator in Europe and Asia-Pacific.
- Global Switch owns and operates seven data centre campuses, with a second phase of its data centre under construction in its Paris campus (due for completion in September 2011).
- The data centres are located in the Tier 1 markets of London, Paris, Amsterdam, Frankfurt, Madrid, Singapore and Sydney.
- The data centres which total 290,000 sq m (3 million sq ft) of gross space have been independently valued by CB Richard Ellis at £3.0 billion as at 31 December 2010 (assuming completion of the second phase of the data centre in Paris).
- Global Switch's date centres have a 93% occupancy rate and operate with 99.999% uptime reliability.
- Global Switch announced its intention to present to pan-European debt investors on 31st March 2011 and conducted a 5-day roadshow visiting London, Paris, Amsterdam, Frankfurt and Edinburgh.
- Following positive feedback and with stable market conditions Global Switch announced the transaction on the morning of Monday 11th April.
- At 8.40am, the order book opened with price guidance of mid-swaps +210 to +220bp for a Euro 500 million transaction.
- With strong investor interest from the outset, the vast majority of orders placed at re-offer. The book went subject at 9.45am and closed shortly thereafter with orders of over €2.5 billion.
- The transaction terms were announced at 10.40am. Due to investor demand the deal was increased to €600 million with the spread set at mid-swaps +207bp, tighter than the initial price guidance.
Summary of the distribution
The final distribution shows a well-diversified investor base both in terms of geographic area and investor types, with a high level of real money participation.
European buyers across many major regions were quick to react to the new deal with the bulk of the distribution being split amongst the United Kingdom (45%), Germany (25%), Scandinavia (12%), Netherlands (8%) and Switzerland (7%).
Distribution by investor type was skewed to real money accounts, with fund managers (75%), insurance/pension funds (10%) and banks (7%) accounting for the placement.
Summary of terms and conditions
Issuer Global Switch Holdings Limited
Issue ratings Baa3 / BBB
Pricing date 11th April 2011
Settlement date 18th April 2011
Maturity date 18th April 2018
Size EUR 600,000,000
Coupon 5.5% annual ACT/ACT
Re-offer spread MS +207 bp; DBR 4.0% Jan 2018 +240.7 bp
Re-offer price 99.631%
Listing London Stock Exchange
Joint bookrunners Barclays Capital, Credit Suisse, Deutsche Bank, HSBC
Global Switch is the largest wholesale carrier neutral data centre owner and operator in Europe and Asia-Pacific and is 100% owned by the Reuben brothers (see www.reubenbrothers.com). Established in 1998, the company offers best in class operational performance. Global Switch is a vital strategic partner for customers that require secure and resilient data centre services with scalable capacity and a high level customer service.
The data centre industry has seen and is continuing to experience significant demand for space due to a number of factors including: the rapid growth of the internet especially in terms of increasing numbers of users who are expecting more on demand information and richer content; the increase of cloud computing technology and SaaS (Software as a Service); the rising trend to outsource IT infrastructure and company owned data centres to experienced and secure providers, and the continuing introduction of wide ranging regulation and legislation around the storage of data.
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