SGD New Issue Review : Fraser Centrepoint Ltd Perp NC 5


– New Frasers Centrepoint Limited (FCL) SGD Perp announced
– Deal is significantly anchored, potentially giving substantial holding to related parties
– Initial price guidance: Low 5%
– Issue Size: Benchmark
– Structure: Perp NC 5, reset in year 5, step up 100bp in year 10, dividend
pusher & stopper, deferred distributions are cumulative and compounding

Issuer: FCL Treasury Pte.
• Guarantor: Frasers Centrepoint
• Unrated
• Reg S benchmark
• Call option: 2019 & at every distribution date after at par
• Distribution: Fixed. Reset in Year 5 based on prevailing SGD 5Y SOR plus the initial spread & every 5 years thereafter
• Step-up: 100bps in year 10
• Distribution Deferral: At issuer’s discretion. Any deferred distributions are cumulative and on a compounding basis
• Dividend pusher: Yes, with 6 month look back period
• Dividend stopper: Yes

Straightforward deal unless you were one of the angry FNN bondholders.

Market cap SGD 4.84 bio. Total debt SGD 4.2 bio after the leveraged buy out last year.

Fraser Centrepoint is a 41.23% majority owner of the Fraser Centrepoint Trust (Baa1/BBB+), a Reit paying close to 6% dividend, but a small part of their business empire.

fcl revenue breakdown

They are likely to be borrowing ALOT more after increasing their $1 bio medium term borrowing programme to S$3 bio just last week following their acquisition of Australand, a former subsidiary of Capitaland fully divested in Mar this year, down in Australia where they are on a building spree.

FCL DEBTNote their new secured loan for SGD 1.8 bio last month that will mature in 2019.

This will make them a very, very big company with Australand at A$2.6 bio and Australian revenues become a key component of their total (if we take Australand’s revenues of 1 bio vs their Singapore revenues of $1.5 bio).

There is nothing much to critique about the company if we  like aggressive expansion and leverage.

Low 5% coupon for 5 year with a strong call option as a back up and dividend stoppers, the public should feel safe enough.

And this is backed by Thailand’s richest man.

A short list of some of the perps we have to choose from out there.

sgd perpsPlease ignore Temasek senior bond in the list. I neglected to omit it.

I would compare this with Genting 5.125% callable 09/2017 rated Baa3, BBB which is trading at 98.625/98.925 5.34/5.29%.

Both are subordinated with  Genting looking like a tad better risk, in my opinion, possessing an earlier call in 09/2017 even if their coupon refix terms are not as desirable.

If FCL delivers a coupon above Genting’s current yield, it should be worth a look.

I am not sure if I would compare Olam against them too but FCL is head and shoulders above Hyflux, Guoco etc for about the same yield.

Then again, since when were perpetuals back in fashion ?

Good luck !