The Transurban Group (ASX: TCL) share price is one to watch after a pre-market capital raising announcement from the Aussie infrastructure group.
Why is the Transurban share price on watch?
Transurban provided an update on financing arrangements for the financing vehicle of WestConnex Group. Transurban owns a 25.5% interest in WestConnex Group alongside others including the New South Wales Government and UniSuper.
WestConnex Finance Company Pty Limited will raise A$650 million via a 10-year, senior secured A$ medium-term note. Pricing was completed on 23 March 2021 with settlement expected on 31 March 2021.
The Transurban share price is one to watch this morning following the price-sensitive announcement on the ASX. Proceeds from the raise will be used for general corporate purposes and to partially refinance an existing A$1.2 billion, 2-year bridge facility.
Transurban interim CFO Tom McKay said, “We are pleased with the strong reception that [WestConnex Group] received in the domestic bond market.” He added, “The success of the issuance demonstrates the underlying strength of the [WestConnex Group] business”.
The transaction represents WestConnex Group’s first bond issuance. Securing flexible financing and extending the group’s debt maturity profile is a positive for WestConnex Group.
The Transurban share price has had a volatile start to 2021 and remains down 7.1% since the start of the year. Shares in the Aussie toll road operator were smashed in the March 2020 bear market before rebounding strongly. In fact, shares in the infrastructure group are up 14.0% in the last 12 months.
However, that means the Transurban share price has underperformed the S&P/ASX 200 Index (ASX: XJO). The benchmark Aussie index is up 42.4% in the last year after a strong rebound subsequent to the coronavirus pandemic.
Foolish takeaway
The Transurban share price is one to watch after the latest financing announcement for WestConnex Group. Shares in the toll road operator have been under pressure in 2021 after a soft start to the year.
Transurban boasted a $34.9 billion market capitalisation with a 2.4% dividend yield as at Tuesday’s close.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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