Scentre Group Raises US$3 billion In New Hybrid Issue

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Scentre Group Raises US$3 billion In New Hybrid Issue

After writing down the value of its mall portfolio by more than $4 billion in its interim accounts, Scentre Group has gone to the US market and raised US$3 billion in a subordinated hybrid note issue.

The Group had hoped to raise US$1.5 – US$2 billion, but accepted substantially more, offering attractive high yields.

The hybrid note issue comprises:

– US$1.5 billion 60-year, non-call 6-year subordinated notes with a coupon of 4.75%

– US$1.5 billion 60-year, non-call 10-year subordinated notes with a coupon of 5.125%

The Group can redeem the notes at par with cash from the call date. The notes do not contain any equity conversion features.

[Also read: What Are Some Of The Key Market Risks For The Remainder Of 2020?]

Being part debt and part equity, the notes receive 50% equity credit from the rating agencies on the issue, limiting the impact on debt ratios and thus the Group’s credit ratings.

Importantly, the hybrid notes are not included as liabilities for the Group’s bank and bond covenants.

On this basis, the company calculates on the basis of 30 June 2020 accounts, debt to EBITDA would be 6.4 times and pro forma gearing would be 27.6%.

Scentre Group now has sufficient long term liquidity to cover all debt maturities until early 2024.

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Elizabeth Moran
Editor In Chief
Elizabeth is a nationally-recognised independent expert on fixed income. She has more than 25 years experience in banking and financial institutions in Australia and the UK and has been published in every major Australian newspaper and investment website. Prior to becoming an independent commentator in 2019 she spent more than 10 years as the head of education and research at fixed income broker FIIG Securities. Prior to joining FIIG, Elizabeth worked as an Editor/Analyst for Rapid Ratings a quantitative credit rating agency. She also spent five years in London, three working as a credit rating analyst for NatWest Markets.

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