(Oct 29): GLP Pte cancelled a dollar bond sale after its record coupon above 10% failed to attract sufficient demand, underscoring continued investor angst towards the developer of warehouses and other logistics real estate.

Demand was strong, but not at a level to reach the company’s desired pricing goal, the Singapore-incorporated firm said in a statement on Tuesday, without disclosing the subscription number and pricing target. 

GLP was marketing its first dollar notes since 2021 on Monday with an initial pricing guidance at 10.375% area. 

Cut to junk by global rating firms last year, the issuer was offering a much higher rate than its previous record, a 4.6% coupon that it paid for a perpetual dollar note three years ago. Still, the return failed to attract enough investors, highlighting persistent worries about the company’s liquidity. 

GLP, a global logistics firm with significant business in China, has been under close investor scrutiny since 2022 due to the country’s years-long property crunch and weakening economy. Its dollar notes due 2025 slid into distressed territory early last year, but recovered to near-par levels as the company repaid maturing debt and made progress on asset disposals. 

Following market reception from GLP’s financial results and deal roadshow, the company had intended to test the market to assess if there was a window to partially redeem a bond maturing June 2025, GLP told Bloomberg News on Tuesday. 

Earlier this month, GLP said it would buy back existing notes due June 2025, which had US$1 billion (RM4.36 billion) in outstanding principal. 

Investor demand is weak this month due to the volatility seen in US treasury yields and buyers are requiring a higher risk premium for the sector in which GLP operates, said Daniel Tan, a Singapore-based portfolio manager at Grasshopper Asset Management.

Considering the proceeds from a recent asset transaction and liquidity on hand, GLP has “sufficient resources to address business needs and debt maturities,” the company added. 

GLP had US$1.9 billion of cash on hand as of the end of June and expects to exceed its US$10 billion monetization target in the coming months, company said in another press release. 

GLP’s outstanding dollar notes are now trading at bid yields to maturity of 8.8% to 12.7%, indicating limited imminent default risk, but its willingness to pay a high coupon when it is expected to close a key asset sale may continue to raise concerns over its liquidity situation, according to analysts, including Bloomberg Intelligence’s Andrew Chan.  

Earlier this month, Ares Management Corp agreed to acquire GLP Capital Partners’ international business for up to US$5.2 billion, a deal that would help improve GLP’s liquidity. Another attempt to sell a stake in GLP’s China operations to a Guangdong state-owned firm, however, stalled due to disagreements over deal terms, Bloomberg reported last week. 

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