First ever senior unsecured corporate bond by SA listed property company

Posted On Friday, 10 December 2010 02:00 Published by eProp Commercial Property News
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Leading JSE listed property company Growthpoint Properties Limited [JSE: GRT] has raised R500 million in the first corporate bond to be issued by a South African listed property company

Norbert SasseThe issue consisting of senior unsecured corporate bonds with four-year maturity was significantly oversubscribed, with R1.9 billion of bids submitted.

A total of 16 different investors participated in the Growthpoint corporate bond auction, contributing to significant demand equal to 3.8 times subscription.

“We are pleased with the favourable pricing of 156 basis points over the three-month Jibar rate,” says Stuart Snowball, Financial Director of Growthpoint Properties Limited. Three-month JIBAR is currently 5.55%, giving an all-in rate of 7.11% for four-year floating-rate money.

Growthpoint is the largest South African listed property company and is included in the JSE ALSI 40, with assets exceeding R35 billion and a market capitalisation of over R28 billion. It has a portfolio of over 431 retail, office and industrial properties that are geographically diversified across South Africa as well as a 67% holding in Growthpoint Properties Australia.

Working with Absa Capital, the investment banking division of Absa Bank Ltd, as arranger and advisor, Growthpoint timed its entry into the local debt capital markets carefully. After achieving a favourable national scale investment-grade Moody’s rating of A1.za (long-term)/ P-1.za (short-term) in November 2009, Growthpoint launched a R5 billion Domestic Medium Term Note Programme.

The company has already achieved success with its shorter-term, three-month and six-month commercial paper issues over the last year. “Each quarterly issue enjoyed strong support from investors with large over-subscription and narrowing margins,” notes Snowball.

Growthpoint’s corporate bond issue marks its next step in further diversifying funding sources and further entrenching its presence in the debt capital markets.  “Growthpoint’s strong credit quality is well reflected in the success of its commercial paper and bond issuances,” says Prasanna Nana, Head of Debt Capital Markets SA of Absa Capital.

“It was always our intention to issue longer term corporate bonds,” explains Norbert Sasse, CEO of Growthpoint Properties Limited. “Investors have indicated an appetite for longer-term Growthpoint paper and this, together with the compression of margins in the market, prompted us to make our entry”.

Growthpoint now has access to all sources of debt funding, including secured bank loans, unsecured loans, Commercial Mortgage Backed Securitisation (CMBS), commercial paper and corporate bonds.

Growthpoint has over the last few years also demonstrated its ability to raise additional equity capital via rights issues, vendor placements of new linked units issued pursuant to new acquisitions as well as the innovative distribution re-investment option offered to its linked unit holders.

The cash raised from Growthpoint’s bond issuance will be used to retire some of its shorter-term commercial paper in issue.

“Following the positive outcome of the initial issue, Growthpoint is likely to return to the corporate bond market early next year and potentially target a larger amount and for a longer term,” says Snowball.

Last modified on Friday, 22 November 2013 11:16

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