JSE-listed retail real estate investment trust (Reit) Vukile Property Fund has issued R796-million of senior unsecured corporate bonds with three-, five- and six-and-a-half-year maturities.

Vukile says strong demand from the market was indicated, with total interest of R2.7-billion, resulting in the issuance being over 3.4 times oversubscribed.

The three-year notes of R214-million were placed at a margin of 119 basis points, at a level better than price guidance. The five-year notes of R462-million were placed at a margin of 137 basis points, and the six-and-a-half-year notes of R120-million were placed at a margin of 146 basis points, both favourably priced at the lower end of price guidance.

Vukile says the overall average weighted issue margin of 134 basis points is significantly tighter than the debt capital markets (DCM) notes maturing in the 2025 financial year that the proceeds of the issuance will be used to repay. By deploying the proceeds to repay existing DCM maturities, Vukile says its loan-to-value ratio is unchanged while interest costs are lowered.

“We are pleased with the strong demand and favourable pricing received. The substantial support for the auction demonstrates the market’s confidence in Vukile’s customer-centric approach in driving value creation for stakeholders and our strong balance sheet,” says Vukile CEO Laurence Rapp.

FirstRand Bank, acting through its Rand Merchant Bank division, was appointed sole lead arranger.

“The keen investor interest, with over 19 institutions participating in the auction, demonstrates Vukile’s strong position as a meaningful and regular DCM issuer. Vukile’s positive financial results and a supportive market culminated in an excellent auction and issuance outcome,” says Farishta Mansingh of RMB.

“The bonds' competitive pricing showcases Vukile's exceptional credit quality, robust balance sheet, and well-defined business strategy. We value the instrumental contribution of RMB as arranger and appreciate the ongoing support of our investors. Robust partnerships and proactive stakeholder engagement reflect our core values and further our success,” adds Vukile group treasury head Maurice Shapiro.

In July, Global Credit Rating Company released a credit rating announcement in which it placed Vukile's national scale long term issuer rating of AA(za) on positive outlook owing to continued focus on growing its high-quality, diversified retail portfolio.

Vukile’s assets are valued at around R40-billion, with 40% in South Africa and 60% in Spain. The Spanish assets are held in the 99.5% Vukile-owned Madrid-listed subsidiary, Castellana Properties.