The manager of First REIT has priced $100 million in aggregate principal amount five-year guaranteed bonds of 3.25% on April 1.
The bonds are the first-ever healthcare social bond in Singapore. They were created in conjunction with First REIT’s inaugural social finance framework (SFF) which creates a platform for the issuance of bonds and loans granted on achieving specific social benefit outcomes and the United Nations Sustainability Development Goals.
The bonds are payable semi-annually in arrears and are expected to be issued on or around April 7.
The bonds are guaranteed by CGIF, a trust fund of the Asian Development Bank (ADB), and are rated AA by Standard & Poor’s Global Ratings.
This is the first time CGIF is providing a guarantee for a social bond issued within the Singapore REIT market and the Singapore debt market.
According to a statement released by First REIT, CGIF will commit to providing an irrevocable and unconditional payment guarantee to bondholders in the event of any non-payment of principal or interest when due under the bonds. The commitment is backed by CGIF’s paid-in capital of US$1.145 billion ($1.55 billion) as at March 1.
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CIMB Bank Berhad, ING Bank N.V.and Oversea-Chinese Banking Corporation Limited (OCBC) are the joint social bond structuring advisors and the joint lead managers for the issue of the bonds.
All three banks will also be issuing an irrevocable standby letter of credit in favour of CGIF which gives CGIF the right to demand from them payment for an aggregate amount of up to $10 million, on account of payments made by CGIF under its guarantee in respect of the principal amount outstanding under the bonds.
The bonds will be listed on the SGX-ST and traded in a minimum board lot size of $250,000. The net proceeds of the bonds will be used to refinance the existing term loan in May.
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“The launch of our inaugural social bond is an important milestone in First REIT’s next chapter of growth encapsulated in its 2.0 growth strategy. It fulfils the twin pillars of strengthening our capital structure by diversifying our funding sources on one hand and riding on megatrends such as the emergence of environmental, social and governance (ESG) factors on the other,” says Victor Tan, CEO of the manager.
“On the back of First REIT’s strong underlying credit fundamentals, the social bonds not only open up a new channel of financing, it also enhances the Trust’s presence in the regional capital markets. This issuance, with its guarantee from CGIF, also sets a new benchmark for issuers to tap the Asean+3 markets for future funding.”
“First REIT is able to leverage on its strategic focus in the resilient healthcare sector, to contribute and create meaningful social impact for the communities it serves. With the launch of the SFF and the Bonds, we are able to bring about a critical alignment of the trust’s social mission and sustainability strategy with its funding strategy,” Tan adds.
Units in First REIT closed at 31 cents on March 31.
