CapitaLand China Trust (CLCT)’s wholly-owned subsidiary, CLCT MTN, has successfully priced its inaugural CNY600 million ($112 million) free trade zone (FTZ) offshore Chinese yuan (CNY) bonds.
The transaction marks the REIT’s first issuance of CNY-denominated bonds within the China (Shanghai) Pilot Free Trade Zone. They will be listed and traded on the Singapore Exchange S68 Securities Trading Limited (SGX-ST).
The bonds will be issued in denominations of CNY 20 million and integral multiples of CNY1 million in excess thereof. They will bear interest at a fixed rate of 3.80% per annum (p.a.) payable annually in arrear.
The bonds, which are due on Oct 17, 2026, will be initially issued in book-entry form recorded in China Central Depository & Clearing Co., Ltd.
The bonds will enable CLCT to access the debt capital markets in China, Hong Kong and Singapore. Proceeds from the bonds can be remitted overseas outside of the China (Shanghai) Pilot Free Trade Zone. In this instance, net proceeds from the offering of the bonds will be on-lent to CLCT to refinance its existing indebtedness and/or to meet working capital requirements outside China.
“CLCT’s inaugural launch of the bonds underscores our ability to attract a high level of investor confidence and strong banking support, both within and outside of China. We are pioneering a landmark initiative as the first Singapore Real Estate Investment Trust (S-REIT) to issue FTZ offshore CNY bonds, paving the way for wider market acceptance by exposing Chinese institutional investors to S-REITs,” says Tan Tze Wooi, CEO of the manager.
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“Through this initiative, CLCT will broaden and diversify its funding sources for greater financial flexibility, expanding our CNY-denominated facilities from 13% (as at June 30) to 18%, achieving overall interest savings as we pay down existing SGD-denominated offshore debt while optimising our capital structure to fuel long-term growth,” he adds. “This transaction will enhance the funding sources of our operations with the local currency corresponding to the revenue generated from our investments, mitigating the impact of currency risk and exchange rate fluctuations. CLCT will continue to proactively manage its balance sheet and capital structure, leveraging favourable financial instruments to achieve an optimal mix of onshore and offshore borrowings while reducing its overall cost of debt.”
The bonds will be unconditionally and irrevocably guaranteed by HSBC Institutional Trust Services (Singapore) in its capacity as CLCT’s trustee.
CMB International Capital (Singapore) Pte. Limited, DBS Bank Ltd. and Oversea-Chinese Banking Corporation Limited have been appointed as the joint global coordinators, lead managers and bookrunners. CMB International Capital Limited and CMB Wing Lung Bank Limited have been appointed as the joint bookrunners in relation to the bonds.
Units in CLCT closed at 88 cents on Oct 12.
