Up to S$300 million will be offered to retail investors, with a fixed interest rate of 4.49 per cent per annum.
SINGAPORE: Frasers Property on Friday (Sep 9) launched S$420 million worth of five-year green notes that will carry a fixed interest rate of 4.49 per cent per annum.
Up to S$300 million will be offered to retail investors in a public offer, while up to S$120 million will be offered to institutional and other investors.
The notes will be issued under its wholly owned subsidiary Frasers Property Treasury’s S$5 billion multicurrency debt issuance programme, and will be “unconditionally and irrevocably guaranteed” by Frasers Property, said the company.
The minimum investment amount under the public offer is S$1,000, with further amounts in multiples of S$1,000.
The public offer opened for subscription at 9am on Friday and closes at noon next Wednesday.
DBS Bank, OCBC Bank and UOB are the joint lead managers and bookrunners of the offer. OCBC Bank is the green finance adviser for the offer.
Retail applications for the public offer may be made at the ATMs of DBS Bank and POSB, OCBC Bank and UOB. They can also be done on the participating banks’ Internet banking websites or their mobile banking apps.
The total offer size may be increased to up to S$650 million if it is oversubscribed in the public offer or the placement.
Subscriptions under the public offer will be subject to balloting if the total subscriptions exceed the amount available.
“The final allocation between the public offer and placement shall be determined at the discretion of the issuer and guarantor in consultation with the joint lead managers and bookrunners of the offer,” said Frasers Property.
Unless previously redeemed or purchased and cancelled, the notes will be redeemed on Sep 16, 2027. Noteholders will receive semi-annual interest payments on Mar 16 and Sep 16 each year, starting on Mar 16 next year.
In a press release on Friday, the company said this was Singapore’s first corporate green retail notes.
“This sustainable financing initiative is in line with the group’s goal of financing the majority of its new sustainable property assets with green and sustainable financing by 2024,” it added.
Mr Loo Choo Leong, group chief financial officer of Frasers Property said: “We hope the introduction of this inaugural corporate green retail notes issuance in Singapore will help further fuel interest from both retail and institutional investors in green finance.”
Mr Lim Teng Chong, senior research analyst for global fixed income at Bondsupermart, told CNA that the green notes are “attractive” given how it offers one of the higher yields in the market.
There has also been a lack of new supply within the retail corporate bond space in Singapore, with the last of such issuance being the private equity bonds from Azalea Investment Management in May.
Mr Lim noted that Frasers Property’s credit profile – one metric that retail investors can look at when evaluating the potential risk of a default – has been improving year on year.
For example, the company’s net gearing, or the ratio of debt to equity, has improved to 69.6 per cent in the first half of this financial year (FY), from 105 per cent in FY2020, following a series of divestment moves and a rights issue.
Frasers Property also has a high proportion of fixed-rate debt at 76.2 per cent, while the average cost of debt is low at around 2.3 per cent per annum.
“The high proportion of fixed-rate debt allows Frasers Property to better manage its debt in a rising interest rate environment,” said Mr Lim.
“Additionally, interest coverage for the company is also adequate at three times.”
Meanwhile, the seniority of a bond can be used to evaluate the priority of repayment in the event of bankruptcy.
“A bond that is ranked higher in seniority will be paid before a bond that is ranked lower in seniority,” Mr Lim explained.
“The Frasers green bond is a senior unsecured bond. It is one of the highest repayment priority and these bonds are paid ahead of stockholders of Frasers.”