Australian Unity launched the first "simple corporate bond" on Monday, taking advantage of new legislation aimed at cutting red tape associated with corporate debt raisings.
The deal, which is seeking to raise about $200 million of five-year bonds, marks the health service provider's second corporate bond, after it raised $120 million of five-year bonds in 2011, paying a margin of 3.55 percentage points over the bank rate.
Australian Unity's latest offering is being marketed at a range of 280-290 basis points over the 90-day bank rate for an initial yield about 5-5.1 per cent .   
Australian Unity's deal was the first in recent years to be assigned a public rating, having engaged agency Australian Ratings, which placed a BBB+ rating on the debt. The new bonds were again rated BBB+ by Australian Ratings. 
The current Australian Unity bonds mature in   April 2016, offering a yield to maturity of 3.5 per cent. 
Australian Unity  chief executive Rohan Mead said the new funds would be used to support growth opportunities, and the proceeds used in part to attend to the purchase of the NSW home care business, general corporate purposes and to manage the retirement of the existing bonds.
Australian Unity is not listed but its bonds trade on the Australian Securities Exchange.
The deal is significant in that it is the first raising to take full advantage of new legislation, aimed at cutting red tape for borrowers seeking to tap the bond markets, that was passed in   August 2014.  
These include legislated changes that allow for less disclosure but also the removal of directors' liabilities associated with the prospectus. 
"There was a bit of a familiarisation process with a new regime but on balance the regime has moved us in the right direction," Mr Mead said. 
He said the removal of directors' liabilities did not, however, make much difference. 
"Our due-diligence processes are exactly as they might have been and ultimately, directors have their at-large fiduciary duties." 
But he did point out that the changes meant the conversation around the deal was "more infused with a sense of opportunity" rather than an emphasis on the risks. 
The new legislation will also make it easy and seamless for Australian Unity to "tap" the bond market through follow-up issues. 
Despite several rounds of regulatory changes and new legislation, only a handful of borrowers has taken advantage of various measures aimed at cutting red tape for issuers hoping to raise funds via ASX-listed senior bonds. 
They include Primary Healthcare, Tatts Group and Bentham IMF.  More borrowers have chosen instead to issue bonds in the unlisted market, with broker FIIG Securities facilitating more than $1 billion of raisings for various small-cap firms in recent years. 
Larger companies instead have continued to raise funds in the wholesale markets. The lack of access for retail investors led the Australian Corporate Bond Company to create and list "XTBs" or exchange-traded bonds linked to companies such as Qantas and Telstra. 
Mr Mead said Australian Unity had developed its name in the local credit market. The bond issue has received strong initial support from "cornerstone" investors and expects investors seeking to spread their risk beyond the banks to consider the offer. 
"There are relatively few non-financial issuers [on the ASX] but if you think about it in a broad range, there are few senior un-subordinated non-financials securities  in the market so we could play positively into a sensible diversification strategy." 
The deal has been arranged by Evans & Partners and National Australia Bank. The joint lead managers are ANZ, NAB and Evans & Partners, with Australian Unity and JBWere acting as co-managers.