Mapletree Logistics to launch $250m perpetual securities issuance

Proceeds will fund AEIs, potential acquisitions.

Mapletree Logistics Trust is planning to roll out $250m worth of fixed rate perpetual securities, with net proceeds to be channeled towards general corporate funding purpose.

According to a report by OCBC, the proceeds may go to the financing of potential acquisitions, as well as asset enhancement initiatives.

The perpetual securities will come with a fixed rate of 4.18% per annum. The distribution rate reset falls on 25 November 2021, with subsequent rests taking place every five years thereafter.

OCBC asserts that MLT’s move to issue new perpetual securities is not surprising. In the past, MLT had raised funding through this avenue, and as at 31 March 2016 has $344m of perpetual securities recorded on its balance sheet.

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.

Further, MLT’s gearing ratio stood at 39.6% as at end FY16. This leaves it with minimal debt headroom of about $41, before hitting a ratio of 40%. While MLT has debt headroom of $518.2m before reaching the regulatory limit of a 45% gearing ratio, management would likely prefer to leave a buffer.

In addition, OCBC states that as perpetual securities are recognised as equity, it allows MLT to keep its gearing at a comfortable level.