Credit lender International Personal Finance has completed a refinancing that will halve the cost of its core Eurobond borrowings.
The Leeds-based doorstep lender said the new £250m seven-year Eurobond issue will materially reduce its debt costs and is an important step forward for the company.
The firm, which lends money to customers in eastern Europe and Mexico, said the new bond has halved its Eurobond interest rate from 11.5 per cent to 5.75 per cent.
Adrian Gardner, IPF’s chief financial officer, said: “To be able to halve the cost of our financing is great for shareholders. The company is very strong and the market for issuing new corporate bonds is favourable.”
Following the refinancing, IPF has bought back £140m of its existing 11.5 per cent Eurobond.
The bond was issued in 2010 when markets were much less favourable than they are now.
The buy-back is expected to result in an exceptional cost of approximately £20m.
The new and cheaper Eurobond funding will be used to support the group’s growth.
The market welcomed the news and the group’s shares closed up four per cent, a rise of 20.5p to 550.5p.
IPF has enjoyed strong trading over the past year.
It reported a 24 per cent rise in 2013 pre-tax profit after it saw a marked increase in credit issued. Underlying pre-tax profit rose to £118.1m.
IPF’s chief executive Gerard Ryan said the results were driven by top line growth and customer quality.
“We’re lending larger sums of money to our best customers,” he said.
“There is strong demand for longer term loans of 90 weeks in Poland and 100 weeks in the Czech Republic and Slovakia.”
IPF lends to 2.5 million borrowers across eastern Europe and Mexico. The group is offering a 10 to 15 per cent discount on the service charge to its best customers.
“Customers are recommending our service to friends and family which is boosting growth,” said Mr Ryan.
The group has rolled out a range of longer-term loan products to its best quality customers in Poland, the Czech Republic and Slovakia.