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Perennial Real Estate 3-year bond deal upsized on strong demand
SEEMS it's risk on again for bond investors as another high yield bond deal this week got upsized.
Perennial Real Estate Holdings sold S$125 million three-year bonds on Thursday at 4.9 per cent. It was the second high yield bond deal this week, following Courts Asia's S$75 million issue on Monday.
"We achieved an order book in excess of S$375 million before final guidance, allowing us to tighten pricing to 4.9 per cent and increase the size from S$75 million to S$125 million," said an OCBC Bank spokesman. Initial price guidance was 5 per cent area.
OCBC handled the issue.
Both deals - Courts Asia and Perennial Real Estate Holdings - were for refinancing as they have debt maturing in a few months.
"We are indeed seeing an improvement in investor sentiment; financial markets have rebounded from their 2016 lows," said Terence Lin, assistant director, bonds and portfolio management, fixed income division, iFAST Corporation.
"The attractive pricing is possibly a factor (at 4.9 per cent, this would be a 369 basis points spread against Singapore Government Securities, versus about 340 on existing Perennial debt)," he said.
The listed real estate player will be using the latest bond issue to redeem legacy Perennial China Retail Trust bonds (PCRT) maturing in July, said Mr Lin. PCRT was consolidated into the group in 2014.
There are currently S$50 million of PCRT bonds outstanding, said Mr Lin.
Perennial Real Estate is a mid-sized real estate firm, with S$1.56 billion market capitalisation as of March 10 and S$6.2 billion in total assets at end-December 2015.
Last month the firm posted net profit of S$41.1 million for the quarter ended Dec 31, 2015, up 93 per cent from a year ago. It closed up one cent to 93 cents on Thursday.
On Monday, mainboard listed retailer Courts Asia's three-year S$75 million issue was upsized from an initial target size of S$50 million, and fixed at 5.75 per cent, lower than the initial price guidance of high 5 per cent following strong demand.
"All proceeds will be used to refinance our existing bond programme that is due in May this year, with the remaining being paid from our renewed securitisation programme and internal cash flow," Courts Asia's group chief executive officer Terence O'Connor said.
DBS Bank and HSBC were the joint lead managers and bookrunners for the Courts Asia issue.