Scottish Mortgage has hiked net borrowings for the second time in five months, despite its assets dipping to £17bn.
The Baillie Gifford trust, fronted by James Anderson (pictured) and Tom Slater, said it had issued more long-term private placement debt, raising an additional $400m (£294m).
The dollar-denominated debt includes a $175m 30-year note with a fixed coupon of 2.99%, a $110m 35-year note with a fixed coupon of 3.04% and a $115m 40-year note with a fixed coupon of 3.09%.
Scottish Mortgage chair Fiona McBain said the transaction provides the trust with further long-term financing at “very attractive rates” and represents a “more appropriate level of gearing of the portfolio,” as its assets have continued to balloon.
“At present, competition for capital in the Scottish Mortgage portfolio is intense,” investment specialist Stewart Heggie said.
“Raising fresh capital at this point will allow us to patiently back more transformational growth companies, as well as increasing stakes in companies who are making considerable progress operationally thus expanding the scale of their opportunities. We possess no competitive advantage in trying to predict short-term market gyrations. Therefore, no tactical attempt was made to capture recent market swings.”
This is the second time the Baillie Gifford trust has raised additional debt in the last five months. In August, it raised £200m in sterling-denominated notes when assets in the trust had hit £20bn. But since then, assets have dipped back to £16.7bn as some of its biggest holdings, including Moderna and Tesla, have seen shares slump.
Gearing in the portfolio stood at £1.6bn in August 2021, meaning after the latest issue net borrowings will be just shy of £2bn.
In 2020 Scottish Mortgage issued its first ever debt in euros.