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$500m Offer of Genting Perpetual Securities

>> Thursday, April 12, 2012

Integrated resort/casino operator Genting will offer a second issue of perpetual securities worth S$500 million. Its first issue was a S$1.8 billion offering in March.

Half of the offering is set aside for retail investors, S$50 million to be offered to directors and employees, and the balance S$200 million to institutional and other investors. There is also an option to issue another S$200 million in the event of over subscription.

The bonds pay 5.125% annually. A quick calculation shows that Genting will need to foot at least almost S$118 million in interest payment per annum for all the perpetual securities.

Despite this, Fitch Ratings is maintaining a Triple BBB rating for this tranche.

Genting has indicated that the proceeds raised could be used to expand into Japan and South Korea. Some are even speculating Australia.

Comparing with its own shares, the payout seems more attractive as the company has no particular dividend policy.

Anyway, at the looks of the market being so hungry for anything that pays a fixed decent return better than bank interest rates, retail investors will be snapping up this issue and it looks set to be heavily over subscribed.

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