Canary Wharf launches consent bid for debentures as rate-basis switch looms

By Rebecca Melvin

Concord, N.H., Oct. 27 – Canary Wharf Finance II plc announced a consent solicitation to modify terms and conditions of a number of its fixed-rate and floating-rate first mortgage debentures ahead of the rate-basis switch away from Sterling Libor at year end, according to a filing with the London Stock Exchange.

The company is seeking to replace the Libor basis of interest rates with compounded daily Sonia.

Earlier this year, the UK Financial Conduct Authority confirmed that after Dec. 31 all Libor settings will either cease to be provided by any administrator or no longer be representative of their underlying market.

The Canary Wharf solicitation expires at 11 a.m. ET on Nov. 25.

The target notes under the consent solicitation include three tranches of class A1 6.455% first mortgage debentures due October 2033 (XS0112279616), including a £240 million tranche, a £475 million tranche and a £500 million tranche. There are £199,330,640, or 16.41%, of the fixed-rate notes outstanding.

In addition, there are two tranches of class A3 5.952% first mortgage debentures due October 2037 including two £200 million tranches, of which 100% is outstanding. Bannerclose Ltd., an affiliate of Canary Wharf Group, owns £5,000 principal amount of the class A3 notes.

There are also class B 6.8% first mortgage debentures due October 2033 (XS0112281190) including an £85 million tranche and a £150 million tranche, of which £120,970,480, or 51.4772% remain outstanding.

The floating-rate notes, which are the only notes that will be affected by the consent bid, are £222 million of class A7 floating-rate first mortgage debentures due 2037 (XS0295171341), of which 100% are outstanding; £104 million class B3 floating rate first mortgage debentures due 2037 (XS0295172075); £275 million class C2 floating rate first mortgage debentures due 2037 (XS0295172406); and £125 million class D2 floating rate first mortgage debentures due 2037 (XS0295172745).

The company invites the holders of each series to consent to the modified terms and conditions for the rate basis as well as removal of the fallback determination of the rate by the trustee. The effective date of the new rate basis for the floating-rate notes begins in January 2022.

The proposal constitutes a “basic terms modification” under the terms and conditions of the floaters, and the holders of each series are invited to approve the proposal.

No consent fee will be paid in connection with the solicitation.

Any credit adjustment spread for the floaters due to the differences in Libor and Sonia will use the five-year historical median methodology agreed to by the International Swaps and Derivatives Association for determining credits.

Barclays Bank plc (44 20 3134 8515; eu.lm@barclays.com) is the solicitation agent and Morrow Sodali Ltd. (https://bonds.morrow sodali.com/cw, 44 20 4513 6933 or 852 2319 413) is the information and tabulation agent.

The real estate services company is based in London.

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