(Bloomberg) -- Canary Wharf Group is in talks with lenders to refinance up to £603 million ($793 million) in junk bonds and has offered its shopping mall assets as collateral for the debt.
The developer of London’s dockland financial district held discussions with around a dozen lenders, mainly banks, according to a person familiar with the matter, who asked not to be identified because the talks are private. It’s looking to refinance a £350 million note due in April next year and €300 million ($332 million) in debt maturing in 2026.
It’s possible that the company may decide to refinance just one of the bonds, Chief Financial Officer Becky Worthington said on an Aug. 29 earnings call with analysts. One option under consideration is so-called “accordion financing,” meaning the company can refinance the bonds as they fall due, she said.
Canary Wharf has come under pressure from falling property prices as tenants including HSBC Holdings Inc. and Clifford Chance are moving to new offices in the City. Job cuts in the financial industry and the shift to more flexible working have added to the uncertainty over long-term demand for office space in the east London outpost. The Qatar Investment Authority and Brookfield Corp. are co-owners of the company.
The Sunday Times reported earlier that Canary Wharf was examining options including raising debt against its shopping malls.
On the Aug. 29 call, Canary Wharf Treasurer Sean Crosby said “given strong performance in retail assets, we’ve had a number of inbound approaches in respect of secured finance options to cover the ‘25 and ‘26 bonds, which we are now actively testing in the wider market.”
“Although the bond market has been improved in recent months, the secured bank market has been a strong, incredible source of financing for us,” he added.
The company is considering refinancing options, including traditional, on-balance sheet secured loans and off-balance structures, which would be more like joint ventures with third party equity and debt, Crosby said on the call.
Canary Wharf’s 2025s are now trading at around 97 pence on the pound, up from 95 pence a month earlier, according to data compiled by Bloomberg.
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