City Dev's 5-yr bond aggressively priced at 3% due to strong credit standing: OCBC

CITY Developments Limited (CDL)'s latest five-year bonds sold at 3 per cent were aggressively priced due to their strong credit standing.

On March 20, CDL raised S$125 million from its five-year senior unsecured fixed rate notes with OCBC Bank the sole lead manager and bookrunner for the deal.

The bond was issued off CDL's S$5 billion medium term note programme.

The issue was launched with a price guidance of 3 per cent and strong investor response led to the bonds priced at just that, said Pee Beng Kiong, OCBC Bank's head of bond syndicate.

"On a yield basis, the five-year deal was printed just 20 basis points above its prevailing notes due in March 2019 for a one-year tenor extension," said Mr Pee.

"Comparing across real estate issuances, CDL's issue spread represents one of the most aggressive pricings a property issuer has achieved in the past few years," he said.

The pricing was based on the five-year SOR (swap offer rate) plus 78 basis points.

The 78 basis points issuance spread for the S$125 million bonds was significantly tighter compared to the 136.5 basis point issuance spread for its S$140 million 3.78 per cent 10-year note last year, he said.

"This reflects the strength of CDL's credit and investors' confidence in the company," said Mr Pee.

Capitalising on CDL's strong name recognition and resilient credit standing, the deal attracted over S$150 million orders, he said.

This led to CDL upsizing the final funding amount to S$125 million, surpassing its original target of S$50 million to S$100 million, he said.

"The orderbook primarily comprised buy-and-hold investors and over 70 per cent of the deal was placed out to institutional investors," said Mr Pee.