– New Fraser Centrepoint Limited (FCL) SGD Perpetual announced
– Deal is significantly anchored, potentially giving substantial holding to related parties
– Initial price guidance: 4.88%
– Issue Size: > $3.5 bil
– 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
• 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.
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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.
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.
Note 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.
List of SGD Perpetuals and Yields
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 ?
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