Miller Homes raises £815m in junk bond sale

Miller Homes executive chairman Chris Endsor

Edinburgh-based house builder Miller Homes has raised £815 million in a bond sale, but banks had to offer investors a higher yield than originally planned, Reuters reported.

The deal was the first high yield bond sale in European markets in about 10 weeks amid a surge in borrowing costs.

Miller raised £425 million from a seven-year bond for an 8.25% yield, compared to an initial range offered of mid-to-high 7%.

Paying a 7% coupon, the bond priced at a deep discount, at 93.45 cents, Reuters said.

A six-year floating rate raised 465 million euros. Paying a coupon of 525 basis points over Euribor, it priced at 97 cents, down from an initial 98.

Miller Homes was bought from private equity firm Bridgepoint Group plc in December by funds managed by affiliates of New York-based investment firm Apollo and the existing Miller Homes management.

Financial terms were not disclosed, but the price was understood to be over £1.2 billion.

“The (high yield) market is still pretty nervous,” George Curtis, portfolio manager at TwentyFour Asset Management, told Reuters.

“You’ve still got inflation, you’ve got rates moving higher, central banks having to act …”