Institutions more keen than retail buyers on Aspial bonds

Potential buyers at the launch of Aspial's Australia 108 last November. Aspial's offered rate of 5.25 per cent is the highest among the eight products yet to mature in the local fixed-income market.
Potential buyers at the launch of Aspial's Australia 108 last November. Aspial's offered rate of 5.25 per cent is the highest among the eight products yet to mature in the local fixed-income market.ST FILE PHOTO

Firm to raise placement tranche and cut retail portion of offer

Aspial Corporation's five-year bonds, launched earlier this week, have proved much more popular with big institutional investors than retail investors.

As a result, Aspial announced yesterday that it will increase the placement portion of the bonds.

The jewellery retailer and real estate group rolled out the bonds on Tuesday, offering a coupon rate of 5.25 per cent.

The bonds amounted to $75 million, with $50 million available for the public and another $25 million in placement bonds for institutional and other investors.

In its announcement, Aspial said it has decided to reallocate $25 million of bonds under the public offer to the placement. With that, the placement tranche is now $50 million, while the public offer has been cut to $25 million. Aspial, however, has the right to increase the public offer size to $100 million if the retail take-up is strong.

Aspial aims to raise $72.8 million in net proceeds to refinance borrowings, increase working capital and fund future business investments, it said when launching the bonds this week.

The move came after positive response for the placement bonds, which received applications exceeding the originally allocated $25 million, with a subscription rate of around three times that amount.

As a result, the placement offer was closed after 7.30pm on Wednesday, Aspial noted, adding that the public offer is still open. Retail investors can apply before the offer closes at noon on Aug 26.

Trading will start on Aug 31.

Aspial aims to raise $72.8 million in net proceeds to refinance borrowings, increase working capital and fund future business investments, it said when launching the bonds this week.

The bonds were launched to a local fixed-income market that currently offers only seven products - excluding Aspial - that have yet to mature. These include Frasers Centrepoint's $500 million issuance in May, which followed Genting Singapore's perpetual bonds, rolled out in 2012.

Aspial's offered rate of 5.25 per cent is the highest of the bunch, but analysts noted that the impending interest rate hike could weaken the value of bonds. The Singapore Savings Bonds (SSB), which will be available for application from next month, will also dominate market interest due to its risk-free nature.

Aspial was, however, not concerned: "We believe retail bonds and the SSB both provide alternative investment options for retail investors, who are sophisticated in their investment objectives."

A version of this article appeared in the print edition of The Straits Times on August 21, 2015, with the headline 'Institutions more keen than retail buyers on Aspial bonds'. Print Edition | Subscribe