FIIG - The Fixed Income Experts

News and Education

Royal Women’s Hospital update

by Alen Golubovic | Jun 24, 2014


  • RWH has a debt structure initially comprising approximately 50% nominal bullet bonds and 50% Indexed Annuity Bonds (IAB)
  • The $148m nominal bullet bond is callable in 2017 and has a final maturity in 2021 and will need to be refinanced sometime between 2017 to 2021
  • The $145m IAB is a 'door-to-door' facility with a final maturity at the end of the concession in 2033 and does not need refinancing. However, the IABs are still exposed to refinancing risk of the nominal bonds, because the project relies on the nominal bonds being successfully refinanced to avoid default
  • RWH has a fairly unique (and complex) financing structure for a PPP executed prior to the GFC for the combination of reasons listed below:
  1. A mix of nominal bullet bonds and amortising IABs
  2. Bullet refinancing required midway through the concession
  3. A four year window to achieve refinancing (2017 to 2021) and an equity lockup mechanism in place during this period to incentivise the project owners to refinance
  4. A  forward starting swap in 2017 with the banks having the right to break the swap upon refinancing of the nominal bonds
  • The key challenge for the project owners will be to refinance the nominal bullet bonds between 2017 and 2021. This is reflected in the downgrade of RWH by Moody’s post GFC and the continuing negative outlook in the absence of a committed refinancing plan from RWH to deal with the nominal bonds
  • FIIG’s research report analyses the refinancing risk associated with RWH, and the potential scenarios which could play out for the project and bondholders
  • The nominal and IAB RWH bonds are available to wholesale investors only in minimum parcel sizes of $500,000 (face value)
  • The nominal bonds and are currently offered at a yield of 7.30% to call and 6.27% to maturity and the less liquid IAB has historically traded at a real yield of around 5.00%

Please contact your FIIG dealer for a copy of the detailed FIIG research report.

Copyright The contents of this document are copyright. Other than under the Copyright Act 1968 (Cth), no part of it may be reproduced or distributed to a third party without FIIG’s prior written permission other than to the recipient’s accountants, tax advisors and lawyers for the purpose of the recipient obtaining advice prior to making any investment decision. FIIG asserts all of its intellectual property rights in relation to this document and reserves its rights to prosecute for breaches of those rights.

Disclaimer Certain statements contained in the information may be statements of future expectations and other forward-looking statements. These statements involve subjective judgement and analysis and may be based on third party sources and are subject to significant known and unknown uncertainties, risks and contingencies outside the control of the company which may cause actual results to vary materially from those expressed or implied by these forward looking statements. Forward-looking statements contained in the information regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Opinions expressed are present opinions only and are subject to change without further notice.

No representation or warranty is given as to the accuracy or completeness of the information contained herein. There is no obligation to update, modify or amend the information or to otherwise notify the recipient if information, opinion, projection, forward-looking statement, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

FIIG shall not have any liability, contingent or otherwise, to any user of the information or to third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, timeliness, pricing, reliability, performance or completeness of the information. In no event will FIIG be liable for any special, indirect, incidental or consequential damages which may be incurred or experienced on account of the user using information even if it has been advised of the possibility of such damages.

FIIG provides general financial product advice only. As a result, this document, and any information or advice, has been provided by FIIG without taking account of your objectives, financial situation and needs. Because of this, you should, before acting on any advice from FIIG, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If this document, or any advice, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure statement relating to the product and consider the statement before making any decision about whether to acquire the product. Neither FIIG, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a ‘wholesale client’ as that term is defined in section 761G of the Corporations Act 2001 (Cth). FIIG strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. FIIG does not make a market in the securities or products that may be referred to in this document. A copy of FIIG’s current Financial Services Guide is available at

The FIIG research analyst certifies that any views expressed in this document accurately reflect their views about the companies and financial products referred to in this document and that their remuneration is not directly or indirectly related to the views of the research analyst. This document is not available for distribution outside Australia and New Zealand and may not be passed on to any third party without the prior written consent of FIIG. FIIG, its directors and employees and related parties may have an interest in the company and any securities issued by the company and earn fees or revenue in relation to dealing in those securities.