Mall developer and manager CapitaMalls Asia (CMA) is offering one-year and three-year bonds worth up to $200 million to retail investors and possibly, institutional investors.
CMA may look at issuing more retail bonds in the future if there is demand.
The one-year bonds that will mature in 2012 offer a return of 1 percent per annum, while the three-year bonds maturing in 2014 carry a 2.15 percent annual interest rate.
Both one-year and three-year bonds will be issued in denominations of $1,000, though the minimum subscription is $2,000.
If there will be a placement, CMA may allocate up to $50 million of one-year bonds and three-year bonds each to institutional and other investors.
The bond issue will help the company diversify its funding sources for future acquisitions.
CMA intends to invest about $2 billion in new projects this year. At the end of Q3 2010, CMA’s cash and undrawn facilities totalled more than $2 billion.
“The business needs a lot of money to grow. We tap money before we need it,” said Lim Beng Chee, chief executive of CMA.
CMA’s upcoming bonds have shorter terms than other bonds recently issued by Singapore-listed firms. Among the companies which offered 10-year bonds in 2010 were Singapore Airlines and CapitaLand.
Ng Kok Siong, chief financial officer of CMA, said shorter tenures would probably be better for retail investors, as there would be fewer chances for fluctuation of bond prices in the event of a change in interest rates.
“For retail investors, we need to be friendly. We want to give them the option of one year,” said Mr. Ng.
The public offer will close on January 17.