First REIT prices S$100M healthcare social bond guaranteed by ADB trust fund

Seedlings. Photo by Francesco Gallarotti on UnsplashSeedlings. Photo by Francesco Gallarotti on Unsplash

First REIT has priced a five-year S$100 million healthcare social bond — a first for Singapore and for the REIT — at 3.25 percent, the healthcare-property focused REIT said in a filing to SGX Friday. 

The issuance confirms a report by Shenton Wire on Thursday.

The bonds are guaranteed by Credit Guarantee and Investment Facility (CGIF), which is a trust fund of the Asian Development Bank (ADB), the filing said. The bond marks CGIF’s first guarantee for a social bond in Singapore’s REIT market and for Singapore debt in general, the filing said. 

The social bonds, which are rated AA by S&P Global Ratings, are aligned with the REIT’s newly set up social finance framework (SFF), which ties financing to achieving specific social benefits in line with the United Nations Sustainability Development Goals (SDGs), the filing said. First REIT said it is focused on the SDG of “good health and well-being.”

First REIT will use the net proceeds to refinance the existing term loan maturing in May 2022, and will use any excess in a manner agreed with CGIF, the REIT said.

Victor Tan, the CEO of the REIT’s manager, said the social bond is part of the REIT’s growth strategy, helping to diversify funding sources and ride on megatrends, including environmental, social and governance (ESG) factors. 

“The social bonds not only open up a new channel of financing, it also enhances the trust’s presence in the regional capital markets,” Tan said in the statement. ““First REIT is able to leverage on its strategic focus in the resilient healthcare sector, to contribute and create meaningful social impact for the communities it serves.”

CIMB Bank’s Singapore branch, ING Bank’s Singapore branch and OCBC are the joint social bond structuring advisors and the joint lead managers for the issuance, the filing said.

Erwin Maspolim, country manager for ING Bank in Singapore and the head of Southeast Asia, said the social bond would contribute toward supporting better healthcare provision in Indonesia. 

CGIF was set up to provide credit guarantees for local currency denominated bonds in China, Japan, South Korea and Southeast Asia to help corporations expand and diversify debt funding sources and gain access to new bond markets and broader investor groups. 

Click here to follow more financial news on Shenton Wire.