Vukile Property Fund (JSE: VKE) has successfully issued R796 million in senior unsecured corporate bonds with maturities of three, five, and six and a half years. The bond issue saw strong demand, with total interest reaching R2.7 billion, resulting in the issuance being oversubscribed by more than 3.4 times.

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

The overall average weighted issue margin of 134bps is significantly tighter than the debt capital market (DCM) notes maturing in FY2025, which the proceeds of the issuance will be used to repay. This move maintains Vukile's loan-to-value ratio while lowering interest costs.

Laurence Rapp, CEO of Vukile, stated:
"We are pleased with the strong demand and favourable pricing. 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."

Key Arranger and Market Response

FirstRand Bank Limited, through its Rand Merchant Bank (RMB) division, was appointed as the sole lead arranger. Farishta Mansingh of RMB remarked on the keen investor interest, with over 19 institutions participating in the auction, highlighting Vukile’s position as a regular and significant DCM issuer.

Maurice Shapiro, Group Head of Treasury at Vukile, added:
"The bonds' competitive pricing showcases Vukile's exceptional credit quality, robust balance sheet, and well-defined business strategy. We value RMB’s contribution as arranger and appreciate the ongoing support from our investors."

Positive Credit Outlook and Strategic Growth

In July 2024, Global Credit Rating Company Limited (GCR) placed Vukile’s national scale long-term issuer rating of AA(za) on Positive Outlook, due to its focus on growing its high-quality, diversified retail portfolio.

As a specialist retail REIT, Vukile’s strategy is centred on owning dominant retail assets in South Africa and Spain, with 40% of its assets in South Africa and 60% in Spain. The Spanish assets are managed through Vukile’s 99.5%-owned Madrid-listed subsidiary, Castellana Properties Socimi. Vukile’s total assets are valued at approximately R40 billion.

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