Now the Hipgnosis Songs Fund locks in rate of interest swaps, offering ‘long-term certainty’ to the price of borrowing


Hipgnosis Songs Fund (HSF) has efficiently accomplished its beforehand introduced rate of interest swap contracts.

This determination supplies the corporate with higher certainty about the price of its debt after acquiring a brand new 700 million US {dollars} revolving credit score facility (RCF), introduced earlier this week.

With rate of interest hedging, companies which have loans can swap a variable rate of interest for a hard and fast fee over a time period.

In July, London-listed HSF famous that rising rates of interest had been pushing up borrowing prices on its $600 billion set of money owed.

This prompted the corporate to evaluation its debt construction on the time because it sought to mitigate its rate of interest threat.

This evaluation resulted in a five-year interval $700 million Revolving credit score facility introduced Monday (October 3). Citibank was the lead arranger for this RCF, which HSF stated would assist cut back its rate of interest threat.

HSF introduced on Wednesday (October fifth) that it was additionally pursuing – now accomplished – rate of interest swap agreements on its debt.

On account of these exchanges, curiosity on all debt drawn by HSF is now fastened at 5.71%together with the debt margin, till January 2, 2023.

From then on, the corporate will enter into rate of interest swaps to hedge $540 million of its debt.

Of this complete of $540 million, $340 million will likely be hedged till the RCF matures on September 30, 2027 at a hard and fast fee of 5.67% together with debt margin.

One other $200 million will likely be lined till January 3, 2026 at a hard and fast fee of 5.89%together with debt margin.

The stability stays uncovered after that date to supply flexibility within the operation of the RCF, the corporate added.

HSF’s previous $600 million facility, alternatively, had a line of credit score of 3.25% on the variable fee of London Interbank Supplied Charge (LIBOR).

On the time of publication, the one-month LIBOR stands at 3.185% – which signifies that, with out its new RCF and its fastened rates of interest, Hipgnosis would at present pay a 6.43% fee in relation to its debt.

With its new rate of interest swaps now secured, HSF has hedged towards the chance that LIBOR (itself a mirrored image of rates of interest from varied international banks) will rise sooner or later.


Merck Mercuriadisfounder and CEO of Hipgnosis Tune Administration, stated of HSF’s new rate of interest hedging transactions: “Along side the finalization of our new revolving credit score facility, the execution of those swaps concludes our refinancing.

“As debt markets have turn into more and more unpredictable over the course of 2022, these new agreements present long-term certainty and a secure platform to capitalize on tailwinds within the music business.”

“As debt markets have turn into more and more unpredictable over the course of 2022, these new agreements present long-term certainty and a secure platform to capitalize on tailwinds within the music business.”

Merck Mercuriadis, Hipgnosis Tune Administration

HCF as we speak clarified that the price of establishing each the RCF and rate of interest hedging has been included within the principal quantity underneath the RCF.

This provides the corporate certainty as to the quantity of its fastened curiosity fee obligations over the time period of those contracts.

Rate of interest hedging has been some of the viable options for firms combating thousands and thousands of {dollars} in debt as central banks world wide proceed to boost rates of interest in an effort to regulate the surge in inflation.


Along with Hipgnosis Songs Fund, the Hipgnosis Group based by Merck Mercuriadis consists of an funding advisory agency Hipgnosis tune administration (HSM), and Capital of Hipgnosis Songs (HSC).

The final was shaped by way of $1 billion with the backing of personal fairness large black stone in 2021.The music business world wide