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CapitaLand re-prices credit curve with SGD bond issuance
Singapore
Chito Santiago 17 Oct 2014

 CapitaLand has managed to reprice its credit curve with the coupon that it achieved in issuing the largest Singapore dollar bond transaction from a real estate company in recent years.


The company on August 21 priced a 10-year S$500 million (US$400 million) bond offering at par with a coupon of 3.80%. This was equivalent to a spread of 132bp over the Singapore offered rate.


“The transaction was relatively high in value compared to existing CapitaLand Singapore dollar secondaries and other Singapore real estate companies,” says Clifford Lee, head of fixed income at DBS Bank, which acted as a joint bookrunner for the deal along with HSBC.


This is the largest single tranche Singapore dollar issuance for a corporate in 2014 and CapitaLand’s largest Singapore dollar senior bond issuance to date. It is likewise its first Singapore dollar senior bond issuance since 2010 and the first bond deal since the sale of its stake in AustraLand and the privatization of CapitaMalls Asia (CMA), creating a more streamlined organizational structure.


CapitaLand in March this year announced the sale of its 39.12% stake in AustraLand at an average price of A$3.75 per share, representing a 3.6% discount to the stock’s closing on March 18, for a total consideration of S$970.10 million.


The company took CMA, one of Asia’s leading shopping mall developers, private to significantly enhance its competitive strengths in integrated developments, simplify its organizational structure and unlock shareholder’s value.


On the back of these developments, the bond offering garnered a strong order book amounting to S$2 billion from 115 accounts, comprising of high quality institutional and private banking investors. In terms of geographic distribution, 85% of the bonds were sold in Singapore, 8% in Hong Kong and 7% in other jurisdictions. By type of investors, fund managers, insurance companies and banks accounted for 59%, private banks 33% and others 8%.


The robust demand came despite a normally quiet period in the market. CapitaLand was able to access strong investor liquidity and take advantage of the low interest environment.


Issued through CapitaLand Treasury, the bonds were drawn under the company’s S$5 billion euro medium-term note programme. Proceeds will be used for refinancing existing borrowings and the investments and general corporate purposes.

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