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PLife Reit completes issuance of 3.3b yen fixed rate notes

Tuesday, March 29, 2016 - 18:58

PARKWAY Trust Management, manager of Parkway Life Reit (PLife Reit), said on Tuesday the Reit has completed the maiden issuance of 3.3 billion yen (S$39.7 million) six-year senior unsecured fixed rate notes due 2022.

The notes are issued by Parkway Life MTN Pte Ltd, under the S$500 million multicurrency medium term note programme.

Proceeds from the notes issue will be on-lent by the issuer (Parkway Life MTN) to PLife Reit to pre-emptively refinance its existing Japanese yen loan due in Q1 2017 and to fund the recently announced acquisition of a nursing home facility in Japan.

Yong Yean Chau, CEO of the manager, said the yen-denominated fixed rate notes were issued to an institutional investor in Japan at a pricing for a six-year debt tenor of 0.58 per cent per annum.

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"The current flush of liquidity in Japan has opened a window of opportunity for the reit to capitalise on the tightened credit spread of Japanese yen bond by the domestic bond investors and to diversify away from bank facilities which is the reit's current sole source of debt funding.

"The appeal of our fixed rate notes has been supported by the confluence of strong investor appetite for credit related to healthcare sector as an alternative investment option in Japan and the rarity premium we command as a new credit issuer in the Japan market."

By tapping the capital market to issue the six-year fixed rate notes, PLife Reit is able to eliminate near-term refinancing and interest rate risk, the manager said.

It added the notes issue which is denominated in the yen serves as a natural hedge for PLife Reit's Japanese assets, mitigating any foreign exchange risk.

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