The Link Reit, which operates retail outlets and car parks in housing estates that were formerly owned by the government, has refinanced existing debt and working capital through a HK$3 billion loan.
The deal would refinance a combined HK$2.7 billion in loans maturing from July to September this year, the company said yesterday. The remaining HK$300 million will be used for 'asset enhancement'.
The three-year loan pays banks an all-in, including interest margin and deal-related fees, 175 basis points over the Hong Kong interbank lending rate and was increased from the original planned loan size of HK$1.75 billion target after 13 banks jumped at the chance to join the deal.
'The deal drew strong attention because the borrower is government-backed and has a healthy cash flow. Local lenders have been hungry for quality names for some time and the last transaction in the market was PCCW last December. That deal also drew huge commitments from banks,' said a local lender.
The credit crunch has pummelled lenders' balance sheets, prompting banks to pull back from lending and the cost of borrowing has soared.
'That all-in yield is a huge jump from the pricing you would have seen two years ago. It just shows that quasi-sovereign and blue chips can still get deals if they are willing to pay a price, but for the smaller guys it's a case-by-case basis,'' said a source.