CapitaLand Limited's S$750m convertible bond issue has 2 big benefits

Making the fresh refinancing worth it.

CAPL priced its proposed S$750m 2023 convertible bond issue at 1.95% yield to maturity with a conversion price of S$4.212 (30% premium over the last traded price).

The group announced that they will use approximately 95%-100% of the proceeds to refinance its existing indebtedness and has set up an invitation to repurchase for cash its existing CBs due in 2016 and 2018.

"We see this to be a positive move that would further optimize the group’s debt structure, which will have impact in reducing its interest payments and lengthening its average debt expiry," said OCBC.

"Given the pricing and the fact that the group increased the issue size from S$600m to S$750m during the book building, we believe this points to firm demand for the issue," it added.