CapitalMalls Asia is getting a headstart on the corporate bond market this year, with a S$200 million sale that the company hopes will be snapped up by retail and institutional investors alike.
Lim Beng Chee, CEO of CapitaMalls Asia, said: “If you look at our balance sheet, as of today, our gearing is still relatively low. And as part of the corporate development, it is good to tap on some debt capital. If you look at the investment needs of our company going forward, we will have to tap some debt capital to grow our business. ”
Paying 3.8 per cent for the first to fifth year, and 4.5 per cent annually for the sixth to tenth year if they are not redeemed, the investment compares well with recent historic returns for equities or bank deposits.
The total amount of bonds that may be issued is up to S$200 million.
CapitaMalls said the amount raised will be used for general corporate purposes and the bond market is a good source of funding to tap on.
In the event of oversubscription, the Issuer shall have the right to issue up to an additional S$200 million of bonds.
Half of the bonds will be offered to retail investors.
For them, the attractiveness of such a bond is directly linked to the underperforming stock market, and the good level of Singdollar liquidity.
Holding it until maturity will also offer protection from otherwise volatile rates.
Clifford Lee, head of fixed income at DBS Bank, said: “If, in essence, you are a bond investor, you are one who is an active bond investor, meaning that you buy and sell, you trade bonds, as opposed to using it as a longer term hold, if you look at it from that standpoint, then you will be a lot more sensitive to rate movements, aside from credit changes in the underlying credit. ”
Experts said retail investors can look forward to more bond offerings in Singapore this year.
DBS said that compared to a year ago, there has been 30 to 50 per cent more interest from companies keen to issue Singdollar retail bonds.
Source : Channel NewsAsia – 3 Jan 2012