Mediclinic refinancing

Mediclinic released an announcement on Monday, titled Swiss refinancing, impact of Swiss interest rates, and UAE growth and refinancing. It is pretty simple. Mediclinic are taking advantage of a world of low yields to refinance some of their existing debt at lower rates, in a market where investors are looking for yield.

Low yields and searching for yield does not quite fit together, however fixed income investors in Switzerland have fewer and fewer options, if you read that the rate is 2 percent above Swiss Libor, you might be forgiven for thinking that is not favourable. However, when you read that Swiss Libor, as per the SNB website is negative 0.81 percent (three month), then it makes sense.

As per the last point: "(an) estimated total blended cost of the new package at a zero Libor rate is c. 1.73 % per annum excluding upfront costs." Cheap. Good work. Not so good work was when the SNB removed the Euro peg, Mediclinic have incurred a a non-cash flow interest charge of 25 million Swiss Francs, 20 million after tax.

They have then not only refinanced their UAE business, 85 basis points cheaper at 200 basis points. There is also an announcement that they are going to be building a 150 bed facility in Southern Dubai (which we are told is growing quickly), Mediclinic has reached an agreement to acquire land. Just a reminder, from the interim results there were 2 hospitals, 9 clinics and a total of 355 hospital beds, 27 clinic beds and a whopping 2293 employees in this Dubai business. As well as 538 doctors, both self employed as well as working for Mediclinic.

Whilst there is increasing competition in the region, there are also more citizen benefits (health benefits), their hospitals are doing well. The Mediclinic Al Hili is open now in the city of Al Ain (Abu Dhabi) to further service the needs of the locals. Citizens can get access to world class facilities without the need to travel far and wide. We now wait for the next Mediclinic update, ahead of their results on the 21st of May.