FCL S$600m perpetual bonds priced at 4.88%
FRASERS Centrepoint Ltd's (FCL) S$600 million debut perpetual issue, the largest perpetual deal this year, has been snapped up, said DBS Bank on Thursday.
The hot demand led to the subordinated NC-5 perpetual bonds being priced at 4.88 per cent, lower than the initial guidance of 5 per cent.
NC-5 means the bonds cannot be redeemed by the issuer until the fifth year, or Sept 24, 2019.
Orders were in excess of S$3.5 billion, said DBS.
DBS Bank and Maybank Kim Eng were global coordinators of the issue.
This latest issue is the fifth perpetual issuance in 2014 and is also the largest perpetual deal by a Singapore non-bank corporate since July 2012. Then, Mapletree Treasury also sold a similar S$600 million perpetual bonds.
Demand for FCL perpetuals was diverse; besides private bank investors, other investors included cash-rich companies.
"It's not uncommon to see these cashed-up companies," said Clifford Lee, DBS Bank head of fixed income
Many companies are sitting on piles of cash and, amid subdued business sentiment, they are deploying their excess funds into fixed income, said Mr Lee.
Business confidence among Asia's top companies is down sharply, according to the Thomson Reuters-Insead Asia Business Sentiment Index.
The overall index fell to 66 in the third quarter, down from 74 in the previous quarter - the biggest drop in three years. But Singapore's reading for the quarter was 50, a bigger drop from the previous quarter's score of 67.
Corporates and banks accounted for 42 per cent of the FCL issue, followed by private banks at 40 per cent and fund managers/insurers 18 per cent.
The strong demand is also due to FCL being a familiar credit.
"It's a high grade credit, an optimal candidate to issue a perp," said Mr Lee.
FCL is an international real estate company with core businesses and assets across residential, commercial and hospitality sectors.
The former real estate arm of the Fraser and Neave group, Frasers Centrepoint's core markets are Singapore, China and Australia.
It is a sponsor and manager of three Reits, Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trust, which are focused on retail, office and business space, and hospitality properties respectively.
