In addition, with stricter capital requirements due under
Basel III, banks are expected to hike their lending rates to corporate
borrowers, making bond markets a more attractive funding option.
Property firms will be hit even harder since they have less
financial flexibility than other sectors due to stricter prudential
requirements. “It’s a combination of banks wanting to reduce their exposure [to
property] and when they have an exposure, to change the way they price that
exposure,” said Craig Parker, a credit analyst at S&P.
Mirvac Group, Dexus Property Group, Australand Property
Group and Goodman Group have all recently signaled plans to sell bonds.
Property developer Mirvac, a regular borrower in the once vibrant Australian
securitization market, is currently looking to refinance debt, including a 200
million Australian dollars bond maturing in September, a company spokesman told
Reuters.
The firm is considering all markets — including Australian
dollar bonds, euro bonds, US private debt and bank loans, he said. The company
has not made a decision and has not mandated banks, he added. Mirvac, which sold earlier this
year a 150 million Australian dollar bond issue to refinance debt, is also a
familiar borrower in the US traditional private placement, a popular source of
funds for Australian firms keen on long-dated debt.
Mirvac is rated BBB by Standard & Poor’s. Dexus Wholesale Property Fund, a
unit of Dexus Property Group, signaled last week its intention to raise debt
when it was assigned an A credit rating by S&P to allow the firm to access
capital markets.
“(The fund) intends to refinance its 250 million Australian
dollars bank facility, which matures in February 2011, in a timely manner and
we are currently considering our options in this regard,” Dexus Fund Manager
Graham Pearson said in a statement emailed to Reuters on Wednesday. The firm declined to give details
such as timing, joint leads or type of debt Dexus is considering. Dexus will update Australian debt
investors on its earnings in the week of Aug. 23. The presentations, arranged
by ANZ and Commonwealth Bank of Australia, will take place on Aug. 23 in
Melbourne and Aug. 26 in Sydney, according to a company spokeswoman. In July, Australand, a diversified
property group owned by Singapore’s Capitaland, flagged its intention to tap
European investors with the establishment of a euro medium term note program to
improve access to longer-dated funding. Australand is not publicly rated. Moreover, Australia’s largest
listed industrial property firm, Goodman Group also has plans to refinance
debt. In May, the real estate firm said it would look to replace large debt
maturing in 2013 in the international bond markets.
Goodman’s BBB rating by S&P is on negative outlook
because of high debt levels. This means the firm is in a state of heightened
surveillance by the rating agency which is looking for debt reduction.
