LISTED property trust Dexus Group is strongly rumoured to be sounding out the market for a domestic debt corporate bond to raise up to $200m to reinforce its balance sheet. The corporate issue is likely to be a three-year bond with an interest rate of about 8.5 per cent.
Dexus raised $749m in equity in April but because of the drop in values and softening of capitalisation rates, coupled with debt concerns, it will now turn to asset sales and the debt market to refinance debt.
On Friday, Dexus sold its 343 George Street office block. The deal will be the first one of more than $50m for the Sydney CBD in about 12 months. Asian investors are said to have snapped up the site and will install Abacus Funds as the manager.
The corporate bond market in Australia is thin, but in the past few weeks a few companies have started using it as an alternative to raising equity. Last week, Leighton confirmed it would launch a domestic corporate bond. It is expected to raise between $150m and $200m and will use the proceeds to refinance its debt.-ends-
Still some pain to come but how successfully would bonds @8.5% to raise 200M be ATM? Let the market decide.
Holding. P.
DXS Price at posting:
73.5¢ Sentiment: Hold Disclosure: Held
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