Friday, August 29, 2014

Mapletree Greater Commercial China Trust - Issuance of $75M Bond

Mapletree Greater Commercial China Trust has been granted provisional condition for their issuance of a $75 Million Bond on the 28th Aug and here are the terms and conditions:

- Issue Amount: $75 Million
- Maturity Date: 8 September 2021
- Coupon: 3.2%
- Issue Price: At Par Value
- Payment Date: Yearly on the 8th September

What does this mean for the Trust?

If we take a look at the issuance amount, it's really negligible and almost certainly they will not be used for any acquisition project for such an amount.

They are likely to be used for repayment purpose with their debt expiry profile looking like this:

  • 2014: -
  • 2015: $534 Millions (29%)
  • 2016: $666 Millions (36%)
  • 2017: $646 Millions (35%)
What this means is that with this issuance of debt, their costs of debts will increase marginally from 2% to 2.05% and gearing ratio will increase marginally from 38% to 39%.

I think with potential interest rate coming up within next year, we will see a lot of management action in other reits as well trying to either refinance their debts or secure as low interest debts as soon as they can.

Cache for example, has one of the highest debt expiry due for next year FY2015 at 60% and we can almost certainly see their costs of debts increasing and will affect the bottomline when that comes.

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