CapitaLand China Trust (CLCT) has priced its inaugural CNY600 million (SGD112 million) free trade zone (FTZ) offshore CNY bonds due 2026.

This transaction marks the REIT’s first issuance of bonds denominated in CNY within the China (Shanghai) Pilot Free Trade Zone.

The bonds have a tenor of three years with a coupon rate of 3.80% per annum, payable annually in arrear.

The bonds will be listed and traded on the Singapore Exchange.

Net proceeds from the offering of the bonds will be on-lent to the REIT to refinance its existing indebtedness or to meet working capital requirements outside China.

FTZ offshore CNY bonds are issued within the China (Shanghai) Pilot Free Trade Zone and are recorded in China Central Depository & Clearing Co., Ltd., offering foreign issuers a gateway to access a unique CNY investor pool and product.

As the first FTZ offshore CNY bonds issued by a Singapore-based issuer, the bonds will enable the REIT to access the debt capital markets in China, Hong Kong, China and Singapore.

Proceeds from the bonds can be remitted overseas outside the China (Shanghai) Pilot Free Trade Zone.

“CLCT’s inaugural launch of the bonds underscores our ability to attract a high level of investor confidence and strong banking support, both within and outside of China”, said Tan Tze Wooi, CEO of the REIT’s manager.

"We are pioneering a landmark initiative as the first Singapore real estate investment trust to issue FTZ offshore CNY bonds, paving the way for wider market acceptance by exposing Chinese institutional investors to S-REITs”.

“Through this initiative, CLCT will broaden and diversify its funding sources for greater financial flexibility, expanding our CNY-denominated facilities from 13% (as at 30 June 2023) to 18%, achieving overall interest savings as we pay down existing SGD-denominated offshore debt while optimising our capital structure to fuel long-term growth”

“This transaction will enhance the funding sources of our operations with the local currency corresponding to the revenue generated from our investments, mitigating the impact of currency risk and exchange rate fluctuations”.

“CLCT will continue to proactively manage its balance sheet and capital structure, leveraging favourable financial instruments to achieve an optimal mix of onshore and offshore borrowings while reducing its overall cost of debt”, he added.

CMB International Capital (Singapore), DBS Bank and OCBC Limited acted as the joint global coordinators, lead managers and bookrunners for the transaction.

CLCT was last done on the Singapore Exchange at SGD0.875, which presently implies a distribution yield of 8.55% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.