As part of our continued growth in the Risk Advisory space, we are delighted to announce the appointment of Bryan Conway as Director, Corporate Advisory. Bryan brings with him over 20 years of extensive experience in treasury, sales, and advisory roles, strengthening our ability to deliver expert solutions to our clients.
Throughout his distinguished career, Bryan has successfully led complex transactions across FX, interest rates, inflation, commodities, and equity asset classes. His experience spans a wide range of corporate, institutional, and public sector clients, further enhancing Centrus’ service offering in these key areas.
Most recently, Bryan held a sell-side advisory role at Goodbody Stockbrokers, where he drove thematic and sector investment strategies for Institutional clients. Before that, Bryan headed the FX & Interest Rates Sales team at Barclays in Dublin and also served as Head of Treasury for Barclays Bank Ireland. His deep understanding of financial markets, paired with leadership experience in top-tier institutions, makes him a valuable addition to our team.
This appointment underscores Centrus’ commitment to expanding our expertise in the corporate advisory sector, delivering tailored financial solutions and strategic insights to meet the evolving needs of our clients. Bryan’s wealth of experience will be instrumental as we continue to provide world-class advisory services, and we are thrilled to have him on board.
“I’m delighted to be joining the Centrus Advisory team. I’m excited to help build on the huge success and growth the team has had over the past few years. I’m looking forward to working in such a dynamic environment and of course delivering innovative solutions to our clients.”
“We are delighted to welcome Bryan to the Centrus team. His breadth of experience and deep expertise across asset classes and advisory roles will be an invaluable addition as we continue to expand our Risk Advisory capabilities. Bryan’s insights and leadership will enhance our ability to deliver sophisticated, client-focused solutions, reinforcing our commitment to excellence in corporate advisory.”
Power price volatility is reshaping risk management strategies across industries. As the energy market faces unpredictable fluctuations, hedging has become essential for managing costs and maintaining stability. In recent years, the energy landscape has been marked by frequent macroeconomic shocks—from geopolitical conflicts to accelerated technology demands—that directly impact energy prices.
Centrus’ latest report, In Focus: Risk Management in an Era of Power Price Volatility, delves into the drivers behind these pricing shifts and offers actionable strategies for businesses. This report highlights:
The rise of power purchase agreements, fixed-volume swaps, and carbon credit strategies
Key factors influencing market volatility, such as geopolitical shifts and technological advances
Practical approaches to building and managing a robust hedging framework
Download the full report to explore how tailored hedging solutions can help navigate today’s volatile energy landscape. For further insights, please contact Mark Taheny, Managing Director at Centrus.
The September CPI of 1.7% is disappointing for rent growth, however lower interest rate projections will help the significant sector re-financing requirement over the coming years. The 10-year swap was 4.3% a year ago, and now sits at 3.7%.
The sharp month-on-month fall in service inflation to 4.9% from 5.6%, along with signs of weakening wage growth is significant. The Bank of England may revise down its inflation projections again, and the market expects successive monthly rate cuts in November and December, with further falls projected.
Swap rates and gilt yields rose through September from a recent low early in the month, with the 10-year swap rising from 3.4% to over 3.8%. Following the lower-than-expected inflation reading, it fell back to 3.7% and may continue to retrace.
We wait in anticipation for the Autumn Statement on 30th October. It will be interesting to see if the OBR revises projections, and how gilt yields react to the Chancellor’s announcement.
Implications for clients
The 1.7% CPI release was below our business planning assumption of 2.2% and below the Bank of England CPI projection.
With the potential for another market moving Autumn Statement and two remaining MPC meetings for 2024, we may see increased volatility as we run into Christmas. We’ll be into risk buffer discussions and business planning season before we know it.
Hedging interest rate risk and having more certainty on cost of capital for decision making can avoid the need for excessive risk buffers in discount rates and interest budgets.
There will be more to get our teeth into next month, until then, we hope for no further escalation in global instability.
Recent client activity
At Centrus, we are actively engaged in supporting our clients with strategic financial initiatives, from loan restructuring to exploring innovative financing solutions. Recent activities include:
Southern Housing EMTN Programme and Sustainability Finance Framework: Newbridge Advisors recently advised Southern Housing to help successfully complete its first issuance from a £1bn European Medium-Term Note (EMTN) programme and Sustainability Finance Framework. The £250m issuance in September saw significant demand from investors, reflecting the growing appetite for sustainable investment opportunities in the housing sector. This issuance marks an important step in aligning housing finance with broader sustainability goals.
Loan Portfolio Restructuring: Restructuring loan portfolios has become a key focus for many of our clients, particularly in light of the current interest rate and banking market environment. Centrus has been working closely with several clients to renegotiate loan terms and improve pricing, providing opportunities to optimise their financial positions and reduce costs, ensuring more robust long-term financial stability.
To learn more about our work in the affordable housing sector, click here.
Correction: This article has been updated to state that Newbridge Advisors advised Southern Housing on their debut issuance under their EMTN, rather than Centrus as incorrectly referenced in previous version.
For the second year in a row we were able to rehash the five D’s of dodgeball… dodge, dive, dip, duck and dodge. Massive thank you to InfraRed Capital Partners Ltd for inviting us back to their annual charity dodgeball event!
The event earned an astonishing £50,000+ for the InfraRed Foundation, which assists schools in hiring community involvement officers both within and outside of their portfolios.
Well done to all competing teams and thank you to InfraRed for a wonderful evening.
H1 2024 saw a significant rise in debt capital markets issuance. European corporate bond issuance totalled €416bn, a 68% increase compared to H1 2023. This surge can be attributed to several key factors:
Peak Rates: After an aggressive interest rate hiking cycle, rates have started to decline from their peak, reducing the cost of new debt issuance and encouraging borrowers back to the market. Some borrowers who have not had an urgent requirement to refinance postponed issuing new debt until rates started to fall.
Tight Credit Spreads: Credit spreads remain at or near historic lows, reflecting a demand/supply imbalance. Despite the increase in issuance. Investors are eager to lock in current yields before central bank rate cuts, demonstrated by net inflows into investment-grade credit funds being positive every week this year except one, leading to strong demand and keeping a lid on credit spreads. Markets have consistently overlooked the geopolitical and economic turmoil of 2024, which might have otherwise caused spreads to increase.
Compressed Year: Concerns about potential volatility and uncertainty due to the upcoming US election in November have prompted corporates to accelerate issuance into the first half of the year. In the investment grade bond market, it is estimated that 75% of the expected 2024 financing has already been issued, compared to the typical 50% seen by mid-year.
Growth of Private Credit: The growth of the private credit market continued in H1 2024, with a number of fund managers raising large funds targeting private credit strategies. These include Goldman Sachs Asset Management raising $13.1bn for its fifth and largest senior direct-lending fund, Wes Street Loan Partners V. Ares Management closed a record-breaking $34bn private credit fund, the largest ever raised.
Private credit has been a growing asset class since the early 2010s, with accelerated growth in the past three years. The growth of private credit was initially focused on the leveraged finance markets as traditional banks retreated from this space due to increased regulation, however, it is increasingly moving into investment grade and real asset markets. For investors, private credit offers what were the equity returns of two years ago in the previous rate environment, but for a lower risk position in the capital stack and usually with a running yield on their investment. Despite the overall increase in commitments, investors remain underweight relative to their targets. The private credit market, currently at $1.7T, is expected to reach $2.8T by 2028.
For borrowers, private credit offers a more flexible alternative to public markets and bank lending, in exchange for a modest price premium.
UK Pension Market Reforms: Last year, the UK Chancellor announced the Mansion House Reforms, including an agreement between nine of the UK’s largest defined contribution pension providers to commit 5% of AUM to unlisted equities by 2030. New Chancellor Rachel Reeves recently met with the large Canadian pension schemes to learn from their model. These schemes are more focused on private markets; for example, the Ontario Teachers’ Pension Plan has only 7% of its assets in listed equities, compared to 60% for traditional UK pension funds.
Booming Risk Transfer Market: Pension Risk Transfer market continues to grow, with both UK and US markets on track for their biggest-ever years. The market across the UK and the US is forecast to exceed £250bn in the next 3 years, with a significant increase in the number of large pension plans seeking a risk transfer as deficits are reduced, given the rise in rates and a desire to transfer before rates fall again. This comes as the transfer market for smaller schemes also continues to grow, with the number of transactions below £100m doubling from 2020 to 2023.
Sector Focus
Social Housing The increase in interest rates has made housing associations hesitant to lock in long-term debt capital markets funding, with housing associations some of the longest-dated issuers in the market and therefore extremely sensitive to rates. Despite strong investor demand for long-dated paper offering attractive spreads in the 15+ year range, borrowers have shown a preference for short-dated facilities, leading to a surge in shorter-dated bank borrowing. The number of debt capital markets deals in H1 2024 was down 25% (39 vs 52 the previous year), however, the overall deal value of £4.1bn was broadly flat due to several large deals, such as Places for People’s ‘biggest ever’ £500m bond.
Strong investor demand for social housing debt has resulted in greater flexibility and creativity in debt capital markets offerings, including more flexibility on charging property security, floating-to-fixed structures, and shelf facilities. With long-term rates reducing, longer-dated, covenant-light debt capital market borrowings can represent good value. From our discussions with book-runners and recent transaction precedents, it appears there is a negligible premium for sub-benchmark issuance in the public bond market – representing an interesting alternative to private placements or bank financing. There is also a strong investor appetite for floating-rate and inflation-linked private placements, offering diverse structuring options for borrowers. Centrus was named the leading arranging of social housing transactions in the year to March 2024*. Some examples of the transactions we arranged are shown below:
Advised Tai Tarian on raising £95m of new bank and capital markets funding to enable full refinance of existing debt
Arranged Anchor’s first £150m shelf facility
Advised Welsh Housing Partnership 2 on a new £38m Private Placement and £30m Government Loan saving £2m per annum
Advised Jigsaw on £803m of new / restructured bank and Private Placement funding, a £50m PP and MRI covenant removals
Real Estate The real estate market has been particularly impacted by rising interest rates, putting pressure on serviceability and valuations, combined with changing occupier demands in a post-COVID world. Lenders have responded with more creative approaches to debt structuring to meet serviceability requirements and some have softened serviceability covenants to adapt to the new rate environment.
While public issuance was very limited in H1, it did see the return of strong names to the market:
Vonovia sold an €850 million 2034 social bond that landed 40bps inside IPT at +170bps (4.25% coupon), despite announcing a €6.76 billion loss for 2023 only a week earlier. Suggesting capital markets are back open to strong names.
Aroundtown completed their first issuance since 2021 €650m 2029 issuance drummed up €4.35bn of orders
P3 completed a €600m 2030 at MS+207bps (43bps tightening) with final demand of €3bn
Logicor €500m 2029 tightened c. 40bps from MS+153bps from €2.2bn of demand
There is a strong lender appetite for living sectors such as PRS (Private Rented Sector), BTR (Build to Rent), PBSA (Purpose Built Student Accommodation), senior living, and industrial sectors, such as warehouses and last mile logistics.
Crossover real estate/infrastructure sectors, such as cold storage and data centres, have also seen strong appetite, benefiting from megatrends like energy transition, digitisation, and changing consumer behaviours. Centrus’ Corporate Advisory team comprises both real estate and infrastructure professionals who are able to leverage lending appetite across both markets to secure the optimal financing terms for assets in crossover sectors.
Centrus recently advised Peel on £45m NRE financing, a real estate business focused on assets linked to low-carbon energy generation. Please click here for more information.
Infrastructure & Renewable Energy
Infrastructure has remained a bright spot and we’ve seen an increase in the overall value of transactions. Despite the volatility of the past two years, infrastructure fundamentals remain strong, particularly projects with inflation pass-through mechanisms. The demand for inflation-linked debt is strong, with limited supply driving borrower-friendly pricing.
Thames Water has frequently been in the headlines recently and was downgraded to junk status by Moody’s and S&P. Despite this volatility, the UK water sector managed to close several important transactions in July, alleviating fears of contagion risk. Severn Trent and South West Water both issued 14-year and 16-year bonds, respectively. These transactions demonstrate that the UK water sector remains open for business, with liquidity available for UK water companies in public debt markets.
Despite the value of deals being down in 2024, there is a strong appetite for renewable projects amongst lenders, with banks being highly competitive, offering tight pricing and long tenors, although the volume of renewable transactions is down year on year. Local banks have proven to be the most competitive, especially for standard solar, wind, and battery energy storage system (BESS) projects. We have seen an increased acceptance of merchant risk from banks with structures including merchant tails of increasing length with appropriate structural mitigants. We have seen increased competition from private capital who are able to offer longer tenors and accept more merchant risk which can be attractive to borrowers given current PPA terms. With power prices down from their peak and rates up, the leverage available has reduced.
Battery storage continues to be an interesting sector and we have seen significant activity in EV charging infrastructure. The first few large deals in these areas have been seen in H1 2024:
Antin-backed Powerdot raised €165m from 6 banks to finance its EV infrastructure roll-out in Portugal
Zunder has raised €225m to deploy over 3,000 charging points in Spain, France, Italy and Portugal
Cespa has been granted €150m by the European Investment Bank (EIB) to support the rollout of its charging network.
Centrus is thrilled to announce the opening of a new office in the heart of New York City now operating alongside our established bases in London, Dublin and Athens.
Our new base is in Rockefeller Plaza under the leadership of our Head of North America, Managing Director Adrian Li. With seven years of experience at Centrus and over 18 years advising clients across the UK, Europe and North America, Adrian brings a wealth of expertise to his new role.
In a recent video below, CEO Phil Jenkins and Adrian Li discuss the significance of this expansion and the opportunities it presents for Centrus and its clients.
This strategic move is a natural progression for Centrus and a significant milestone as we solidify our position as a global provider of corporate finance solutions for real assets and essential services.
For over 12 years Centrus has served clients across the UK, Europe and North America with services spanning Risk Advisory, Debt Advisory and Distribution, Corporate Finance, M&A and Equity Raising. The opportunity in the US is a huge one for us and our clients in our sectors across Affordable Housing, Student Accommodation, Operational Real Estate, Infrastructure, Transport and Energy Transition.
The Bank of England voted 8-1 to hold interest rates at 5%. Sterling strengthen following the decision, and at $1.34 today, is the highest dollar exchange rate since March 2022.
CPI remains at 2.2% following the August 2024 release, in line with expectations, and the BoE expects CPI at 2.5% by the end of 2024, lower than the previously forecast 2.75%.
The announcement on 11 September that July GDP growth was flat for a second month in a row led a fall in SONIA swap rates due to the implied economic weakness. The fall has retraced moderately in recent days.
The 10-year swap rate at c. 3.5% is down 0.6% from a year ago, while the 30-year gilt has dropped 0.2% in that time to 4.5%.
Implications for clients
The sector faces c. £10b of debt maturities in 2024/25 and 2025/26, in addition to c. £11b of new funding over that time. The rise in popularity of shorter tenor bank funding in recent years is driving an increase in debt maturities.
With gilt yields rising relatively steeply from 10 years (3.9%) to 30 years (4.5%) and the 10-year swap trading at an attractive 3.5%, funding strategies require careful thought and execution. The banking market is currently a popular solution to capitalise on the lower swap curve.
However, covenant light debt capital market (DCM) solutions will be required over the coming years due to the need for deeper liquidity pools to meet the higher quantum of funding. Shorter tenor DCM solutions are rising in popularity to avoid the current steep gilt yield increase at the longer end.
The outlook for CPI has shifted moderately lower, helped by sterling strengthening which eases import costs. For business planning assumptions, September CPI for this year and beyond is not expected to deviate materially from the 2% long term target. Our latest guidance is 2.2% for September 2024 and 2.1% for September 2025.
With SONIA expectations falling further, headroom in 2024 business plans has continued to improve.
Recent client activity
At Centrus, we are dedicated to providing strategic financial solutions and support to our clients. Our recent activities include:
Portfolio Restructure: Centrus arranged £70m of new funding for Hafod and advised a £90m portfolio restructure.
Market Update: If you missed our 2024 Affordable Housing Seminar last week, please join us at our Webinar for a summary of the event, more details on the timing of this to follow. We will run through topics including recent sector financial performance and activities such as mergers and stock disposals, the challenge of the existing funding model for some Housing Associations and the wider funding landscape.
To learn more about our work in the affordable housing sector, click here.
Christian brings over 20 years of advisory, financing and investing experience in infrastructure assets across Europe, North America and Australia. Throughout his career, he has led the origination and execution of infrastructure transactions valued at approximately US$40 billion, demonstrating a proven track record of success. Notably, Christian possesses expertise in acting on both the buy-side and sell-side of large transactions, with a particular focus on energy transition investments.
Christian was most recently Co-Head of Infrastructure at Slate Asset Management and previously held positions at QIC and RBC Capital Markets. He will strengthen Centrus’ global M&A offering to sponsors with his focus on the UK, US & German markets.
“We are thrilled to welcome Christian to the Centrus team. His extensive experience and deep understanding of the global infrastructure landscape will be invaluable as we continue to grow our global M&A practice alongside our strong offering in Debt Advisory and Risk Advisory.”
Geoff Knight, Managing Director – Centrus
“I am excited to join Centrus at a pivotal point for the company as we look to expand on our M&A offering to corporates, developers and financial sponsors across different jurisdictions. Centrus has a strong, agile team with impressive expertise across infrastructure services and I join the business at an interesting time for sustainable finance in the sector.”
Centrus, the global corporate finance firm specialising in real assets and essential services, today announces the appointment of Russell Schofield-Bezer as a Senior Advisor to the Higher Education team.
Russell is the founder and CEO of RSB Advisory Ltd. which has been established to provide universities and other organisations with advice on strategy development, stakeholder engagement, and industrial partnerships.
Working with Centrus, Russell will be supporting the firm’s strategic growth ambitions with independent schools, colleges, and universities, including a special focus on financing across student accommodation, campus real estate and energy transition.
Russell is currently a board member at the University of Lincoln, serving as the Chair of the Finance, Infrastructure and Investment Committee, and previously worked as an independent investment advisor to the Universities of Manchester, Leeds and Sheffield and as Chief Operating Officer at Northern Gritstone.
Russell brings over 30 years of capital raising and investment experience, gained across 14 years spent at HSBC split across time in London and New York, most recently as the Chief Investment Officer of the Private Bank in the Americas, following 15 years in senior positions at JPMorgan Chase.
“Russell’s expertise and links in the education space will bolster our Higher Education offering to enable us to better help educational institutions to build financial strategies, access capital and manage risk.”
Phil Jenkins, CEO at Centrus
“I’m looking forward to working with the Centrus team to develop strategic partnerships with leading educational institutions. Centrus has an impressive track record in the higher education sector, and together we will build on our collective expertise to help these institutions navigate the financial challenges currently facing the sector.”
Russell Schofield-Bezer, Special Advisor, Higher Education at Centrus
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