Vukile concludes oversubscribed R1bn unsecured bond issue

Laurence Rapp, CEO of Vukile Property Fund.

Vukile Property Fund has issued R1.027 billion of senior unsecured corporate bonds with three-, five-, and, for the first time, seven-year maturities in an oversubscribed issuance that extends the REIT’s debt maturity profile. The initial target issuance was R750 million.

Three-year notes of R530 million were placed at a margin of 128 basis points, five-year notes of R402 million were placed at a margin of 143 basis points, and Vukile’s inaugural longer tenure seven-year notes of R95 million were placed at a margin of 155 basis points, all favourably priced towards the lower end of guidance.

The issuance has increased the share of Vukile debt issued in debt capital markets (DCM) to 17% of total group debt (previously only 12%).

“In line with our goal, Vukile has successfully expanded its presence in the DCM. This move not only provides investors with a High-Quality Liquid Assets (HQLA) issuance but also extends the maturity of Vukile’s debt with the addition of a new seven-year bond offering,” says Laurence Rapp, CEO of Vukile.

Absa Corporate and Investment Bank, a division of Absa Bank Limited, acted as sole lead arranger.

The proceeds of the issuance will be used to repay existing bank debt, as such Vukile’s loan-to-value (LTV) ratio is unchanged.

In July 2023, GCR Ratings affirmed Vukile’s national scale long-term issuer rating of AA(za) and its national scale short-term issuer rating at A1+(za), with a stable outlook.