Assured Guaranty facilitates Queen Alexandra Hospital financing

Assured Guaranty UK (AGUK) has guaranteed scheduled principal and interest payments on approximately £327 million of index-linked secured bonds that were raised in the public market by QAH Finance, a newly incorporated special purpose company.

The 18½ year bonds were issued on April 22, 2021, with the issuance being oversubscribed following high demand from institutional investors. The proceeds are financing the issuer’s acquisition of an index-linked credit guarantee loan from the Department of Health and Social Care, the existing funder of the Queen Alexandra Hospital private finance initiative (PFI) project in Portsmouth.

The issuer is rated Baa1 by Moody’s Investors Service. With AGUK’s guarantee, the bonds are rated A2, with a stable outlook.

The Queen Alexandra Hospital PFI project has been fully operational for around 11 years, having completed its construction phase in 2010. It has a 30-year operational concession that expires in December 2040 with Portsmouth Hospitals NHS Trust.

Dominic Nathan, managing director at Assured Guaranty UK, said: "The successful placement of £327 million of 100 percent index-linked wrapped bonds into the public markets attests to the significant demand from investors for long dated, guaranteed index-linked debt. The prevailing low interest rate environment created the ideal conditions for the Department of Health and Social Care to realise the benefits arising from the transfer of their loan.”

AGUK has an A2 rating from Moody’s Investors Service and a financial strength rating of AA from S&P Global Ratings and AA+ from Kroll Rating Agency. CMS Cameron McKenna Nabarro Olswang provided legal advice on the deal, with MAMG acting as technical adviser, Mazars as model audit and tax adviser and Marsh serving as insurance adviser.

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