OUE Commercial REIT (OUECT) recently announced that it has successfully priced S$150m 3.03% fixed rate notes due 2020 under its S$1.5b Multicurrency Debt Issuance Programme. The notes drew strong interest, with the final order book attracting funds in excess of S$400m.

OUECT has no refinancing requirement in 2017, and from what we understand, the notes will be used to partially refinance the SGD term loan due in 2018.

We are positive on OUECT’s foray into unsecured borrowings, which is part of the manager’s capital management strategy to harness greater financial flexibility and diversify its funding sources in the current low interest rate environment.

We are also aware that the notes are priced at a rate that is in-line with some of the recent note issuances by other S-REITs. We maintain HOLD and our fair value estimate of S$0.68.

Source: OCBC Research - 28 Aug 2017