The credit research team’s lack of enthusiasm is mainly due to CDL’s weakened credit profile with reported loss before interest and tax in FY2020 of $1.8 billion including the impact of Sincere Property Group. The loss excluding Sincere Property would be $18 million. OCBC warns that it may downgrade CDL should it make any significant acquisitions, including from Sincere Property.
City Developments launched a $200 million senior 5-year bond tranche at 2.3%, on Mar 12, 130 bps above 5-year Sor (swap offer rate). The settlement date is Mar 23, 2021 and payment dates are Mar 23 and Sept 23. The proceeds will be used to finance the general working capital requirements and corporate funding of the Group, and/or to refinance the existing borrowings of the Group.
OCBC Credit Research reckons there are better opportunities elsewhere. “While the new issue looks around fair relative to its own curve, we do not find the pricing at 2.3% attractive, seeing fair value around 2.4%-2.5% instead,” OCBC’s report says.
