Client stories

NatWest supports Halfords Group with their £180m refinancing

We’re delighted to have supported Halfords Group Plc with their refinancing and switch from LIBOR to SONIA.

A household name with ambitious growth plans

Founded in Leicester in 1892, Halfords has become a household name as the UK’s leading provider of motoring and cycling products and services, serving customers in its 446 retail stores and 26 cycling shops across the UK. The company is also one of the UK’s leading independent operators in vehicle servicing, maintenance and repairs via its 371 Autocentres.

Looking ahead, Halfords is accelerating investment in the business to become a much more differentiated specialist with an integrated, unique and more convenient service offering. This will include extending its network of Autocentres and increasing its fleet of “Mobile Expert vans” to satisfy customer demand for mobile services delivered at a location convenient to them. Also, the company wants to become the “go-to-place” for the fast-growing number of e-bike and e-scooter users, and drivers of electric vehicles.

NatWest undertakes key roles

During Q3 of 2020, Halfords approached the bank to participate in a 3yr extendible £180m revolving credit facility. Halfords is a new name for NatWest and we provided a £35m top-tier commitment in the refinancing as well as being mandated as Lead Arranger, Documentation Coordinator and Risk-Free Rate Manager – as the company took the opportunity to transition from LIBOR to SONIA on a switch basis.

NatWest helps customers get comfortable with SONIA

“London Interbank Offered Rate”, will be phased out at the end of 2021 with UK financial services providers transitioning to a new “risk free rate” (RFR), known as SONIA, the “sterling overnight index average”. This move was prompted by the dwindling number of interbank borrowing transactions which resulted in LIBOR becoming unsustainable.

NatWest Group has been among the frontrunners in helping to establish a SONIA market. NatWest Markets have actively supported the liquidity of a Reformed SONIA derivative market since the introduction of the new benchmark in 2018, and has worked with large financial institutions as bookrunner to facilitate SONIA transactions helping to establish a SONIA market.

In March 2019, NatWest launched and priced the first SONIA-linked benchmark issuance for the NatWest Group, issuing a £750m 4-year Covered Bond at SONIA + 60bps. In June 2019, NatWest delivered the market’s first loan referencing the SONIA rate in a pilot with one of our large corporate customers.

Client education is a vital part of the transition from IBORs to RFRs. A particular challenge is that SONIA is a backward-looking rate. To help clients get comfortable with what this means in practice, NatWest Markets have developed a simple calculator to help clients get comfortable with what a SONIA rate means in practice. Clients can use the calculator to see how to use daily realised rates to construct a compounded rate over time. The calculator is available here.


The information provided in this article has been prepared by National Westminster Bank Plc (NatWest) for information purposes only and is subject to change from time to time. The information and views expressed should not be treated as advice or a recommendation of any kind. NatWest makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness or reasonableness of the information provided and disclaims all liability for any use you, your affiliates, connected companies, employees, or your advisers make of it. NatWest accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

Copyright 2021 © NatWest Bank Plc. All rights reserved.

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