CAPITALAND’S share price closed 4.3 per cent lower yesterday after the property group announced its $1.1 billion seven-year convertible bond (CB) issue due in 2016.
Some near-term share price weakness is expected due to the dilutive impact of the CB issue’s potential new shares, similar to the group’s four previous CB issues, notes DMG & Partners analyst Brandon Lee, who is maintaining his ‘buy’ recommendation on the counter. He also raised the revalued net asset value-backed target price to $4.43, from $4.37 previously, to ‘reflect the slight accretion on the assumption of full CB conversion’, he said in a research note.
CapitaLand lost no time in announcing the use of the proceeds from its latest CB issue to repay part of its existing indebtedness. It will repurchase $250 million aggregate principal amount of an earlier issue of outstanding CBs due 2018 for $238.9 million. The earlier CBs carry a 3.125 per cent per annum coupon rate Continue reading
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