- On 22 October, GLP Pte Ltd ("GLP") announced a proposed issuance of a new 3.5-year bond and a concurrent tender offer to repurchase its outstanding June 2025 USD bond "GLPSP 3.875% 04Jun2025 Corp (USD)". The concurrent new bond issuance and tender offer are to proactively manage the Group's debt maturity profile and extend the debt maturity.
- The tender offer price for the bond is $100. The total amount used for the tender offer will not exceed the principal amount of the new 3.5-year bond. Therefore, the size of the tender offer depends on the issuance size of the new bond.
- Meanwhile, for investors who hold the June 2025 USD bond, intend to accept the tender offer and subscribe to the Group’s new 3.5-year bond, they could have a higher priority of acceptance for the new 3.5 year bond. This could show pre-discussion between the Group and some bondholders, such that the issuer offers this kind of option to them.
- In general, if the issuers propose a tender offer to bondholders, it means the holders have an extra method (apart from directly selling the bond in the secondary market) to sell their bonds at a specified price. Issuers typically determine the tender offer price based on the prevailing market price plus certain premium. Hence, whether to accept the tender offers depends on (1) whether one sell at the specified price offered by the issuer and (2) whether now is the opportune time to sell.
- This tender offer price of $100 is quite attractive, well above the current market price of $97 to $98. Additionally, the coupon rate of the June 2025 bond is only 3.875%. If investors sell the bond at part ($100), and redeploy the proceeds from the tender offer into other bond investments, it is likely to find alternatives, which provide a yield above 3.875% with a manageable credit risk.
- While we expect GLP to repay the June 2025 bond on time, there are still around seven months from now to the maturity. The uncertainty comes from the GCP International deal (part of the Group’s fund management businesses), which involves the regulatory approval. The proceeds from the deal (around USD 1.5 billion cash and around USD 300 million worth of Ares shares) are key repayment sources. The new 3.5 year bond also has an investor put option clause (if the deal is not completed by 31 July 2025, new bondholders could sell the new bond to the Group at $101). Hence, accepting the tender offer and selling the bond at par could be a reasonable way to mitigate risks.
- Lastly, if the investors successfully sell the June 2025 bond at par, they could consider reinvesting the proceeds into "GLPCHI 2.950% 29Mar2026 Corp (USD)", with comparable default risk albeit a different issuer—GLP China, a core subsidiary of the Group. This bond offers an attractive yield to maturity of 8.6% with a price of $92.1, which could serve as an alternative to " GLPSP 3.875% 04Jun2025 Corp (USD) ".
- However, investors should note the Group has discretion on rejecting any tender offer. In this scenario, investors can continue holding the June 2025 USD bond until maturity without needing to sell urgently in the secondary market.
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Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds positions in GLPSP 4.500% Perpetual Corp (USD).
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