Mediclinic International Ltd. (MDC), South Africa’s second-largest hospital group, rose the most in more than 2 1/2 years on plans to refinance 28 billion rand ($3.4 billion) of debt facilities to benefit from record-low rates.
The stock climbed 6.9 percent, the biggest gain since November 2009, to 42.80 rand at the close in Johannesburg, the highest on record.
Mediclinic also plans to raise 5 billion rand in a fully underwritten stock offer to existing shareholders, the Stellenbosch, South Africa-based company said in a statement today. It will refinance 2.9 billion Swiss francs ($3 billion) in debt at its Swiss Hirslanden unit and 3.6 billion rand in South African borrowings with cheaper debt and equity finance.
“We are taking advantage of the very attractive prices in the market and this gives us the flexibility to take advantage of opportunities in South Africa, Switzerland and the United Arab Emirates,” Chief Executive Officer Danie Meintjes said in a conference call today.
Yields on dollar-denominated corporate bonds have dropped 95 basis points this year and reached a record low 5.21 percent yesterday, JPMorgan Chase & Co.’s CEMBI indexes show. South African corporate bond sales have risen 52 percent this year to 62.7 billion rand, more than twice the 24 percent gain for emerging markets globally, data compiled by Bloomberg show.
“Mediclinic is making use of the good rate environment,” Mathew Menezes, an analyst at Avior Research Ltd. in Johannesburg said. “This shows there is liquidity out there.”
The average cost of new debt raised in Switzerland will be 2.5 percent, compared with the current 5.6 percent, resulting in a 550 million-rand annual saving, Mediclinic said. South African debt at 10 percent “compares favorably” with the 10.3 percent it currently pays, the company said in the statement. The more favorable borrowing rates would have boosted so-called normalized earnings per share adjusted for one-time items by 14 percent in the year through March, it said.