Issue of S$100 Million Perpetual Securities (ISIN: SGXF90369095; SGX Stock Code: 5XEB)
Cromwell European REIT (CEREIT)’s inaugural issue of S$100 million fixed-rate subordinated perpetual securities priced at a coupon of 5.00% was issued on 24 November 2021.
The perpetual securities saw good demand from private wealth investors, which resulted in tightened to 5.0% coupon, from the initial price guidance of 5.125%.
Two 5-year cross currency swaps (CCS) were entered into to convert the Singapore dollar proceeds into Euro and the Singapore dollar coupon into an attractive fixed rate in Euro of 3.55%, locked in for a fixed term of 5 years.
The CCS have a total notional amount of S$100 million with a Euro equivalent of approximately €65.1 million. There are certain green ESG initiatives that could see the Euro coupon reduce slightly on a notional amount of S$50 million of the CCS if certain targets are met.
The Manager’s Chief Executive Officer, Mr. Simon Garing, commented, “I am very pleased that CEREIT has priced S$100 millioninaugural issuance of perpetual securities today. After transacting a cross currency swap into our functional currency of Euro, the coupon in Euro provides attractive funding, which is treated as equity in CEREIT’s statement of financial position. The perpetual securities market is well-established in Singapore with the securities also being treated as equity for the credit rating assigned by Fitch Ratings Service and also for regulatory purposes. This is the latest value add initiative in our transformational capital management programme, further diversifying CEREIT’s capital sources enabling it to fund new acquisitions on an accretive basis. We are also pleased that part of our hedging construct includes a green component, which if the targets are met annually will see a small reduction in interest costs.”
The perpetual securities were issued under the S$750 million Multicurrency Perpetual Securities Programme established on 5 November 2021.
The net proceeds from the issue of the Perpetual Securities (after deducting issue expenses) will be used by CEREIT and its subsidiaries for financing or refinancing acquisitions and/or investments, financing any asset enhancement works, refinancing borrowings and general corporate purposes.
For more, read here (link to both announcements – on pricing and on issue)
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