Paragon Group Share Price (PAG)

The Paragon Group of Companies, a specialist buy-to-let and consumer finance group, on Wednesday launched an offer of six per cent bonds due December 2020, marking the initial transaction under a one billion pound euro medium term note programme. The fixed interest of 6.0% will be payable semi-annually in arrears on March 5th and September 5th until September 5th 2020. The bonds have a minimum initial subscription amount of 2,000 and are available in multiples of 100 thereafter. Nigel Terrington, Chief Executive of Paragon, said: "The bonds will complement our already strong balance sheet, allow us to diversify our funding base and extend the tenor of our borrowings. "We have operated in the UK markets for over 25 years with a business model that kept us profitable throughout the recent credit crunch. We continue to see strong growth opportunities in the markets in which we operate."

A month later the group announced the renewal of its mortgage warehouse facility with Macquarie Bank's London branch, increasing the facility to �250m from �200m. The facility, rated by Fitch Ratings, will be available until December 2016. The extension and increase in the loan facility brings total warehouse capacity within the group to �450m and will be used to support growth plans in the buy-to-let market. The company was considering the acquisition of Hampshire Trust, a wholly-owned bank subsidiary of National Counties Building Society. Discussions have since terminated but Paragon said it will be exploring other avenues including the establishment of a banking subsidiary in the group. "During the period, the group has made excellent progress, successfully managing the portfolio of originated and acquired assets, seeking further opportunities to expand by acquisition, developing the new lending business, increasing the funding available for buy-to-let mortgage originations and completing a further securitisation," Paragon stated.

The group also made .6m of new buy-to-let loans and 0.5m of further advances. By the end of the period the pipeline of new business amounted to 102.7m. "The credit quality of the new lending business written in the period has remained excellent.," the company said. "Following the increase in funding capacity the group has enlarged and extended its lending activities and we anticipate increased business volumes during the second quarter." Cash generation from the group's portfolios remained strong. Free cash balances came to 154.4m at December 31st, compared with 127.7m at September 30th. In October the company completed, through its subsidiary Paragon Mortgages, a 200m securitisation transaction consisting exclusively of buy-to-let assets.

The Paragon Group of Companies reported Thursday a 16.7 per cent increase in operating profits for the last three months of 2012. The FTSE 250 provider of mortgages and personal loans said its financial performance was in line with management's expectations with operating profits of �23.7m, compared with �20.3m for the same period the previous year. Pre-tax profits, after a charge of �0.2m for fair value hedging items, were �23.5 million for the period. A strong portfolio pushed profits higher during the quarter with credit performance of consumer loans in line with management forecasts.

It would be good to have an update on Hampshire because this could be a game changer. The access to another funding base would be very good. There are a number of money market players who would be able to deal with PAG if it had the deal done.

Moving up nicely.