Intu Properties announces the launch of a proposed GBP485m bond to refinance existing debt facilities which are due to mature in February 2015

Hyprop successfully issues R450 million unsecured 6-year bond

Despite a weaker Rand and higher long-bond yields, South Africa’s listed property sector registered a gain of 1.4% during the week ended 27 September 2013. 

Close relationship between the yields of nominal bonds and listed property is not entirely warranted given the equity attributes of listed property, some analysts say.

THE South African-listed property and bond markets, which have highly correlated yields, are the least favoured local asset classes and are expected to remain volatile for some time, according to asset managers.

THE historically close correlation between South African listed property sector yields and yields to maturity on long-term government bonds appeared to break down in June, according to Catalyst Fund Managers.

The volatility of the listed property sector over the past two weeks can be largely explained by movements in bond yields and the rand, and given the market’s close correlation to bonds, analysts say it may remain volatile in the short term.

Hyprop Investments, a shopping mall owner with clients including Body Shop and Timberland, wants to raise almost R1bn in bonds to reduce its debt-servicing costs.

THE weakening bond market is a key risk to sustained high returns from the local listed property market

In light of the pessimistic economic outlook, it is important to look for good quality equity and listed property shares that have strong dividend/distribution payment histories, attractive current yields and are going to grow the dividend/distribution income stream in the future.