Friday, 22 June 2018

Mapletree to re-open Singapore hybrid market

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Mapletree Investments is set to re-open the Singapore-dollar market for corporate hybrids with the first perpetual bond outside the banking sector in three months.

Source: Reuters/Tim Chong

Lunch time crowd walk on promenade in front of skyscrapers of the Marina Bay Financial Centre in Singapore

Property investor Mapletree, which is 100% owned by Singapore sovereign fund Temasek Holdings, will issue unrated perpetual capital securities with a call option at the end of year five. Citigroup, DBS and HSBC are joint leads on the deal.

Its move comes after a recovery in trading volumes in perpetual bonds in the last two weeks, coupled with the launch of a S$1bn (US$794m) Tier 1 hybrid from local lender OCBC Bank on July 5.

The Reg S deal is being marketed at a yield of around 5.625%, a generous pick-up over comparable bonds from Ascendas, another government-backed entity, and Mapletree Logistics Trust, part of Mapletree Investments.

The S$300m Ascendas 4.75% perp, one of the tightest subordinated perps when it priced in April, is quoted at 4.75%, while the S$350m MLT 5.375% perp is seen at 4.92%. Another comp is the huge S$2bn Genting Singapore 5.125% perp, which trades at 5.01%.

The last perpetual securities from a corporate issuer came on April 18 from another real-estate developer, Hotel Properties, which sold a S$150m 6.125% non-call five. Since then, potential corporate issuers have found no traction, which bankers blamed on the indigestion resulting from the flood of Genting perps in the market.

A rebate of 25 cents will be given to private bank accounts. Pricing is as early as today.

Cumulative feature

The deal has a call at year five, and a 100bp step-up at year 10. It has a distribution deferral with a cumulative feature and a change-of-control clause calling for a 100bp step-up.

Mapletree Investments had sounded out investors on a host of options during a roadshow in Singapore and Hong Kong last week. Some investors said they were told of non-Sing dollar options, but other investors were told the company was eyeing a Sing-dollar senior or a perp. This suggested the company had not firmed up plans and only made a decision after investor feedback.

The issuers are expected to use the proceeds from the perp for its own purposes, as its subsidiaries are well under-leveraged, which means they can fund on their own terms and will not need financing from their investment company.  

The company manages S$19.9bn worth of office, logistics, industrial, residential and retail/lifestyle properties, with extensive overseas operations, including China, Hong Kong, India and Japan. It recorded net profit growth of 6.2% year on year to S$793m for the financial year to March 31 2012.

Mapletree Investments set up a US$3bn EMTN programme last month via wholly owned Mapletree Treasury Services. It said MTS would allow the company to diversify its funding sources from Sing dollars, and have access “on an ongoing basis to the international debt capital markets outside the US in reliance on Reg S” to other currencies, such as US dollars, Hong Kong dollars, CNH and Japanese yen. The company can also sell perpetual securities under the programme.

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