SGD NEW ISSUE REVIEW : FRASER CENTREPOINT TRUST 4Y 3%

NEW ISSUE – FRASERS CENTREPOINT TRUST 4Y SGD

Issuer:  FCT MTN Pte. Ltd.
Guarantor: HSBC Institutional Trust Services (Singapore)                                   Limited (in its capacity as trustee of Frasers   Centrepoint Trust)
Expected Issue Rating:      BBB+ (S&P)
Format: Reg S, S274 & 275 of Singapore SFA
Status:  Senior, unsecured, off the SGD1bn Multicurrency  Medium Term Note Programme
Issue Size: TBD
Initial Price Guidance:  3% area
Payment: Semi-annual, Actual/365 (fixed)
Tenor:  4 years
Use of Proceeds:   As per the Programme
Redemption for Taxation Reasons: Yes, in accordance with the Programme
Denomination:   SGD250,000
Governing Law:   Singapore Law
Listing:   None
Clearing:   CDP
Timing:   As early as today

This would be the tightest premium I have seen them pay since the TCC takeover. Quite shocking but they got a nice lift from the Ascendas Hospitality (unrated) deal yesterday which paid a 1.22% premium for 5 years, so can we really complain about 1.02% for 4 years from a BBB+ rated entity ?

Table of where they have been issuing their bonds.
fcl spreads

The market is choking on FCL issues so its time for FCT to step in and thanks to CDL, 3% is now what folks must learn to live with no matter how high SIBOR goes.

To be fair to FCT, the rest of the REIT issues this year have been grinding tigther and this bond issue is a replacement issue (hopefully) for their maturity of SGD 70 mio coming up in Jun – the FCT 2.3% 06/2015.

Keppel Reit (BBB/Baa2) 7Y 3.15% (+1.26%)
Mapletree Commercial Trust (Baa1) 8Y 3.25% (+1.355%)Mapletree Greater China Trust (Baa1) 7Y 3.43% (+1.31%)

FCT has the highest level of secured debt to assets ratio, standing at 18.2%, amongst the group of  MLT (0%), SUNTEC (11.8%), KEPPEL(12.8%), CMT(7.5%), CCT(11.5%) and A-REIT (11.7%). It is still a low number and issuing more bonds would definitely help.

Good luck.