The challenge

GLP Pte Ltd incurred US$2.1bn of incremental debt following its privatisation event which closed in January 2018. GLP was subsequently downgraded to “negative outlook” by Moody’s, reflecting the significant increase in debt incurred post-privatisation and GLP’s acquisition of a European logistics portfolio, Gazeley.

The solution

By December 2018, within 12 months of making the commitment to external rating agencies, GLP’s treasury team achieved the US$2.1bn debt pare down through a variety of measures. These ranged from the issuance of panda and ‘Belt and Road’ bonds, asset sales, the creation of private real estate funds in China, Japan and Europe to seed assets into, and the raising of property-level debt.

On January 5th 2018, GLP also became the first company to receive landmark approval from the China Securities Regulatory Commission to issue onshore belt and road bonds – RMB-denominated bonds used to finance projects related to the ‘One Belt, One Road’ initiative that seeks to connect Asia and Europe over land and sea.

GLP also actively managed its debt maturity profile through early refinancing and termed out JPY45bn (US$405m) maturing debt with five-to-seven-year bank loans, achieving interest savings of around 2% in the process.

On asset sales, between February and December 2018, GLP sold a total of JPY115.4bn (US$1.2bn) worth of assets to GLP J-REIT (3281:Tokyo), its long-term vehicle for capital recycling in Japan, and the treasury team used the proceeds to pare down holding company acquisition debt and to fund other expansion opportunities across the group.

As a result, Moody’s upgraded the ratings outlook of the GLP from ‘negative’ to ‘stable’ in November 2018, only ten months after it had downgraded the outlook in January 2018.

Best practice and innovation

For the past 18 months, GLP’s treasury team was able to adopt various financing solutions ranging from asset sales, bond issuances, private real estate funds and property level debt to pare down the incremental debt.

This allowed GLP to be in a better position to tap upon various financing options when required for acquisition when the opportunities arose. This is evident from the bond spread that tightened from T+360bps in January 2019 to T+205bos in July 2019.

Furthermore, GLP has been able to strengthen its bank relationships and expand its cooperation in the areas of cash management, escrow, FX, rates and hedging that have been generated through its acquisitive activities at the same time.

Key benefits

• GLP’s treasury team achieved the US$2.1bn debt pare down within 12 months.
• Credit rating outlook upgraded back to ‘stable’ within ten months.
• Achieved an interest savings of approximately €1m through a EUR-USD structure debt financing.
• Achieved interest savings of around 2% through early refinancing and termed out of its JPY45bn maturing debt.