Link Reit lifts bond offering to $3.6b amid investor rush
Property trust starts presentations as higher yield draws asset managers
The Link Real Estate Investment Trust, the largest property trust listed in Hong Kong, has increased the size of its bond sale by 50 per cent to $3.6 billion from $2.4 billion as investors crowded into the debt security amid strong liquidity.
The decision to expand the deal was made one day after the property trust kicked off its investor presentations for the three-tranche notes on Tuesday.
The bond sales are aimed at refinancing part of the $12.2 billion bridge loan Link Reit took out to buy assets for its listing in November last year.
The three-year fixed rate tranche was increased from $800 million to $1.4 billion with a 5.12 per cent coupon rate, according to a Link Reit spokesman.
The two-year fixed rate tranche was raised from $800 million to $1.4 billion with a 5 per cent coupon rate, while the $800 million two-year floating tranche remains unchanged and was priced at 10 basis points above the three-month Hong Kong interbank offered rate, or Hibor.
BNP Paribas, HSBC, and Standard Chartered Bank are arrangers for the offering. Moody's Investors Service rated the notes A3 while Standard & Poor's gave them an A rating.
'If you're a Hong Kong dollar investor, this deal looks pretty appealing because it's hard to find 10 basis points on such a great rating,' a fund manager who bought into the deal said.
'Liquidity conditions are quite aplenty as you can see from the discount in the Hong Kong dollar forward market and banks and asset managers have shown good demand and the issuer has responded with a bigger deal.'
The rarity of such a large real estate investment trust selling bonds in the Hong Kong market also made the deal more attractive, the fund manager said.
The one-year Hong Kong dollar forward contract was quoted at 570 points below the spot rate yesterday, compared with 525-535 below the spot rate on Tuesday.
The Link Reit's local currency bond sale was part of an up to US$750 million dual-currency bond sale that would include a US dollar tranche with a maturity of five to seven years, senior bankers said.
'Fund managers have more choices in US dollars so the issuer will have to come out with something even more appealing than the Hong Kong dollar deal,' another fund manager said.
Link Reit shares closed up 0.64 per cent to finish at $15.80 yesterday.
The closing price represents a yield of 3.91 per cent based on the reit's 2007 forecast dividend.
