PUBLISHED NOVEMBER 12, 2013
Closer scrutiny of Reits, trusts IPOs if rates rise
But market players see current window for more of such deals in upcoming IPO pipeline
The tapering of quantitative easing (QE) is expected to be followed by a rise in interest rates, which would affect the borrowing costs of Reits and business trusts as many are highly geared - PHOTO: SPH
[SINGAPORE] Real estate and business trust offerings may be a harder sell in the coming months, as the market shifts towards expectations of higher interest rates.
While there is still an appetite for the initial public offerings (IPOs) of real estate investment trusts (Reits) and business trusts, interest will become more selective given the overhang of a future reduction in US monetary stimulus.
The quality of sponsors and assets and the growth profile of the trust will be more closely scrutinised, said investment bankers.
"There's no denying the fact that we are in a new environment, and risk-free rates are going to go up," said Edward Lee, Deutsche Bank's head of South-east Asia equity capital market.
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