CapitaLand Integrated Commercial Trust sells S$250m of 2.15% notes

A SUBSIDIARY of CapitaLand Integrated Commercial Trust (CICT) has issued S$250 million of 12-year notes with a 2.15 per cent coupon rate.

Its wholly-owned unit CMT MTN issued the notes, which will mature on Dec 7, 2032, to institutional and/or sophisticated investors.

The notes come under the real estate investment trust's (Reit) S$7 billion multicurrency medium-term note programme. They are guaranteed by CICT trustee HSBC Institutional Trust Services (Singapore), said the Reit's manager in a bourse filing on Monday evening.

Proceeds from the deal will be used to refinance the CICT group's existing borrowings; finance investments; on-lend to any trust, fund or entity in which the Reit has an interest; finance asset enhancement works; and for general corporate and working capital purposes.

Moody's Investors Service on Tuesday assigned an A3 senior unsecured rating to the new notes, with a negative outlook.

The credit ratings agency said CICT's A3 issuer rating reflects its large scale and market position as the second-largest Reit in the Asia-Pacific, its diversified and balanced portfolio, and the strong and stable income from its assets.

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Moody's added that the negative outlook on the notes' rating reflects the uncertainty surrounding the extent of impact from Covid-19-related disruptions on the earnings and performance of CICT's retail properties, as well as the Reit's long-term financial policy and business strategy after the merger with CapitaLand Commercial Trust (CCT) earlier this year.

The agency said that CICT's liquidity profile is "inadequate". Moody's also expects the Reit's credit metrics to weaken following the merger, given CCT's higher leverage and the approximate S$1 billion in incremental debt needed to fund the merger's cash consideration.

"Nonetheless, Moody's expects CICT will reduce its leverage to a level appropriate for its current rating over the next 12 to 18 months," it said.

Meanwhile, S&P Global Ratings gave the notes an A- long-term issue rating, and said it believes the Reit's capital structure does not have material contractual or structural subordination risks.

In S&P's view, CICT will maintain its leading market position as a landlord of retail and commercial space in Singapore. "We expect CICT to sustain its solid asset quality and stable profitability, and operate in line with its financial policy of maintaining a gearing ratio of below 40 per cent over the next 24 months," S&P said in a statement.

The new notes will be listed and quoted on the Singapore Exchange on or about Tuesday.

CICT units rose S$0.03 or 1.5 per cent to trade at S$2.03 as at 10.26am on Tuesday.