CMT – BT

CMT’s $250m bond issue fully taken up

To meet overwhelming response, lead manager may choose to exercise upsize option to raise size of issue to $350m

CAPITAMALL Trust’s (CMT) $250 million offering of three-year unsecured convertible bonds has been fully snapped up by institutional and accredited investors.

The base offering size of the bonds, due April 2014, was raised from an initial $200 million – as announced at the launch – to $250 million because of the strong demand, said CMT.

‘We are encouraged by the strong response to the issue of our convertible bonds,’ said Simon Ho, chief executive officer of CapitaMall Trust Management Limited (CMTML), manager of CMT. He added the issue was to ‘optimise’ overall debt structure and ‘diversify’ funding sources.

To meet overwhelming response, the lead manager may choose to exercise the upsize option within 30 days from March 10, 2011 to further raise the size of the issue by up to $100 million, to $350 million. The sole bookrunner and sole lead manager for the issue is Credit Suisse (Singapore) Limited.

The conversion price for the bonds stands at $2.2692 per unit and will offer an interest of 2.125 per cent per annum, payable on a half-yearly basis.

The funds raised from the bond issue will be used primarily for debt refinancing, which includes the refinancing of an existing convertible bond of $550 million that has a put option on July 2, 2011 at 105.43 per cent of the principal amount. The put option is currently out-of-the-money.

Moody’s sees ‘no impact’ on CMT’s rating as a result of its latest bond issue.

They added though the new bond issue could raise CMT’s debt-to-assets ratio beyond that incorporated in the trust’s current rating, the redemption of the entire existing convertible bond of $550 million with fresh proceeds and available cash is expected to take leverage back to levels in line with current ratings.

Moody’s Investors Service currently has an A2 corporate family rating or A3 senior unsecured debt rating for CMT.

The only other major debt maturing in the next 12 months, other than the put option pertaining to the existing convertible bond, would be CMT’s 40 per cent share in term loans drawn under a term loan facility granted to RCS Trust by a special-purpose company, Silver Oak Ltd.

However, analysts generally feel this is not a source for worry and is likely to be manageable by the trust going forward.

CMT shares eased two cents to end at $1.81 yesterday amid a broad market retreat.