Perennial offering $200m four-year bonds at 4.55%

ATTRACTIVE: Our offering provides retail investors with an attractive investment proposition amid the relatively-low interest rate environment for retail bank deposits. - MR PUA SECK GUAN, Perennial chief executive, on its bond offering.
ATTRACTIVE: Our offering provides retail investors with an attractive investment proposition amid the relatively-low interest rate environment for retail bank deposits. - MR PUA SECK GUAN, Perennial chief executive, on its bond offering.

Retail investors have another opportunity to get into the bond market, thanks to a move by Perennial Real Estate Holdings to raise capital.

The firm is offering four-year bonds of up to $200 million - due in 2020 - with a coupon rate of 4.55 per cent, it said yesterday.

Perennial said it may increase the total offer size to as much as $300 million if the public offer is oversubscribed.

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

Perennial chief executive Pua Seck Guan said in a statement yesterday: "Our offering provides retail investors with an attractive investment proposition amid the relatively-low interest rate environment for retail bank deposits."

This is Perennial's second retail bond issuance in less than a year.

Its maiden offering last October - a three-year bond with annual payout of 4.65 per cent - was oversubscribed by about 4.1 times based on the initial launch of $150 million, Perennial had said then.

OCBC Bank credit analyst Nicholas Koh told The Straits Times: "We think Perennial can continue to ride on its household name recognition to maintain good traction with retail bond investors.

"We won't be surprised if the deal size is increased, as the past retail bond issues have all been upsized after strong order books."

Mr Alex Wijaya, senior sales trader and institutional sales at CMC Markets Singapore, said: "It is a good time for companies to source for funds given that interest rates are still relatively low. Bonds are also generally considered to be more stable, so they match investors' risk tolerance at the moment."

Perennial said the net proceeds from the offer will be used for the "repayment of indebtedness incurred by certain subsidiaries" and for general corporate purposes, including refinancing borrowings and working capital.

This is the second retail bond offering this year, following Aspial Corporation's four-year, 5.3 per cent bonds earlier this month.

Mr Terence Lin, iFAST Corporation's assistant director for bonds and portfolio management, expects the number of retail bond offerings this year to match or surpass the four deals done last year.

"The retail bond market in Singapore is definitely on track to pick up. So if issuers see that there is fairly strong demand from retail investors, that could encourage them to come in," Mr Lin noted.

Application for the Perennial offer closes at noon on April 27. The bonds are expected to be issued on April 29, and be traded on the mainboard of the Singapore Exchange on May 3.

DBS Bank and United Overseas Bank are the joint lead managers and bookrunners for the offer.

A version of this article appeared in the print edition of The Straits Times on April 21, 2016, with the headline 'Perennial offering $200m four-year bonds at 4.55%'. Print Edition | Subscribe