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Japan: PLife pays up for yen funding

Parkway Life REIT, which is owned by IHH Healthcare, has paid up for yen funding, though with the possibility of US interest rate hikes, the move is a canny way of hedging forex exposure.

It sold ¥3.5 billion (US$32.6 million) six-year unsecured notes at 0.65%. The 2024s are off the group’s S$500 million (US$371 million) multicurrency debt programme.

But bankers away from the deal say that PLife had to pay up. The group’s maiden six-year bond in March 2016 sold at 0.58%, while its 5.5 year issue in early December last year came in at 0.57%.

With the US Federal Reserve signalling the possibility of more interest rate hikes this year it is a calculated move by the group. “It is crucial to timely term out PLife REIT’s maturing loans to mitigate refinancing risks,” said CEO Yong Yean Chau.

Denominated in yen, the issue serves as a natural hedge for PLife REIT’s Japanese assets, eliminating its exposure to foreign exchange risk. Earlier this month, the group acquired Konosu Nursing Home Kyoseien, a nursing rehabilitation facility in Greater Tokyo, under a sale-and-leaseback agreement with Iryouhoujin Shadan Kouaikai for ¥1.5 billion. With this issue, PLife REIT has successfully termed out over 50% of its loans due in 2019.

DBS is sole lead manager.

Posted on: 22/02/2018 UTC+08:00


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