Oxley offers retail bonds at 5% interest rate

Retail investors have another chance to get into the bond market, thanks to a move by developer Oxley Holdings to raise capital.

The firm is issuing four-year bonds of up to $125 million with a fixed interest rate of 5 per cent, it announced yesterday.

Retail investors will need at least $2,000 to subscribe, with interest payable half-yearly and in arrear.

Oxley's executive chairman and chief executive officer, Mr Ching Chiat Kwong, said: "Our first retail bond offering will diversify the group's funding sources while providing investors an additional choice to be part of Oxley's investment story and earn stable, regular returns."

The firm's wholly-owned subsidiary, Oxley MTN, will issue up to $100 million of the bonds to the public. The remaining $25 million will be made available to institutional and other investors.

The total issue size could be raised to $300 million if the offer is oversubscribed.

Net proceeds are expected to be used for working capital and capital expenditure requirements as well as general corporate purposes, including refinancing loans, Oxley said.

Oxley's offer comes hard on the heels of Perennial Real Estate Holdings' offering this month of three-year retail bonds with an annual payout of 4.65 per cent.

Perennial Real Estate last week said its offer received overwhelming demand. It had a total subscription of about $618 million from both the public offer and the placement tranche - an oversubscription of about 4.1 times based on the initial launch of $150 million.

Mr Clifford Lee, head of fixed income at DBS Bank, told The Straits Times that "the retail bonds market continues to be quite receptive", as demand from investors is outpacing the supply.

DBS Bank, the sole lead manager and bookrunner for the Oxley issue, said there have been four retail bonds offered this year - from Oxley, Perennial Real Estate, developer Frasers Centrepoint and jewellery firm Aspial Corporation. There was just one such offering last year, from CapitalMall Trust with an issue size of $350 million.

Despite more issues this year, Mr Lee said, "in terms of the absolute number, we are just really scratching the surface".

"First and foremost, the retail bonds market is not as developed because there hasn't been a lot of supply, and second, you have a disclosure requirement regime that is as tough as the equity market."

Mr Lee hopes that a proposed bond seasoning framework outlined in the public consultation paper by the Singapore Exchange and the Monetary Authority of Singapore last year would encourage more issuers to offer retail bonds on the market.

Under the proposal, issuers will be allowed to offer wholesale bonds to retail investors after the bonds have been listed for a "seasoning" period of six months. Issuers of these bonds would be exempted from issuing a prospectus for the retail offering - thereby easing disclosure requirements.

Oxley said applications for the bonds will close at noon on Nov 3. Trading on the mainboard is expected to commence on Nov 6.

A version of this article appeared in the print edition of The Straits Times on October 27, 2015, with the headline 'Oxley offers retail bonds at 5% interest rate'. Print Edition | Subscribe