Mapletree Logistics Trust - OCBC Investment 2016-05-18: Proposed issuance of S$250m of perpetual securities

Mapletree Logistics Trust - OCBC Investment 2016-05-18: Proposed issuance of S$250m of perpetual securities MAPLETREE LOGISTICS TRUST M44U.SI 

Mapletree Logistics Trust: Proposed issuance of S$250m of perpetual securities

  • Mapletree Logistics Trust (MLT) recently announced that it intends to issue S$250m worth of fixed rate perpetual securities
  • The net proceeds of this issuance would be used for general corporate funding purpose, which may include the financing of potential acquisitions and asset enhancement initiatives. 
  • The perpetual securities will come with a fixed rate of 4.18% per annum, with the first distribution rate reset falling on 25 Nov 2021 and subsequent resets taking place every five years thereafter. 
  • MLT’s decision to issue new perpetual securities does not come as a surprise to us, as it had previously raised funding via this avenue, and currently has S$344.0m of perpetual securities recorded on its balance sheet, as at 31 Mar 2016. 
  • Moreover, MLT’s gearing ratio was 39.6% as at end FY16. This leaves it with minimal debt headroom of ~S$41.0m before reaching a gearing ratio of 40%. 
  • While MLT has debt headroom of S$518.2m before hitting the regulatory gearing limit of 45%, we believe management would prefer to leave a buffer. 
  • As perpetual securities are recognised as equity, it allows MLT to keep its gearing at a comfortable level. 
  • We maintain our HOLD rating and S$1.02 fair value on the stock. 





Wong Teck Ching Andy CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-05-18
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 1.02 Same 1.02


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