Dignity Caring Funeral Services, the U.K.'s second-largest funeral services group, is undertaking a £210 million securitization of funeral homes and crematoria. The deal is believed to be the first of its kind. Proceeds from the deal, Dignity Finance, will be used to refinance existing debt and to finance the building of new crematoria, says John Keane, an analyst at Fitch Ratings in London. J.P. Morgan Securities is underwriting the deal. Calls to J.P. Morgan were not returned. Leslie Ferguson, a spokeswoman for Dignity, declined to comment.
"It's an unusual asset class, but I suppose they have a steady cash flow," remarked one securitization analyst. The bonds will be backed by income generated by a portfolio of 502 funeral homes and 21 crematoria. According to Keane, crematoria and funeral homes are very stable businesses, and well established in the community, making the barrier to entry from competitors difficult. Last year, Dignity conducted 70,112 funerals and 39,102 cremations.