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HwangDBS Research expects Axis REIT to issue sukuk bonds

Posted on October 25, 2011, Tuesday

KUALA LUMPUR: Axis Real Estate Investment Trust (REIT) is expected to issue sukuk bonds worth RM300 million in the
near-term to refinance its short-term debt, extend its debt expiry profile and lock in lower interest rate.

As at September 30, Axis REIT short-term debt stood at RM340 million, with RM198 million due this year.

However, it was likely REIT might draw down a portion first, given the revolving credit due to the maturity in 2011, and planned unit placement, HwangDBS Vickers Research Sdn Bhd (HwangDBS Research) said in a statement yesterday.

“At 38.2 per cent gearing (Sept 30) based on total asset value, the company could still take on around RM151.1 million in debt before hitting the 50 per cent threshold.

“This is unlikely as impending capital management exercises should supplement its existing funding for asset acquisition purposes and bring it to a more comfortable low around 30 per cent level,” it said.

The research firm maintained its ‘buy’ call on the REIT and reduced the target price by 15 sen to RM2.75 from RM2.90. — Bernama

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