Published November 25, 2008

CCT shares fall on refinancing jitters

Market nervous over loans that are yet to be confirmed, analysts say

By UMA SHANKARI

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SHARES of CapitaCommercial Trust (CCT) fell as much as 11.9 per cent yesterday after it said that it was pursuing its refinancing needs with several institutions.

'As and when the refinancing is finalised, the necessary announcements will be made,' the real estate investment trust (Reit) said in a statement to the Singapore Exchange after the market closed last Friday. CCT was responding to a news report that said it had verbally mandated four banks to handle a $580 million three-year refinancing exercise.

CCT shares fell to as low as 70 cents yesterday before ending 6.5 cents down at a one-year low of 73 cents.

Analysts said that the shares took a beating because market was jittery that the loans had not been confirmed.

'It's just reaction to Friday's announcement,' said one analyst.

Concerns remain over Singapore- listed Reits' access to credit, ability to refinance borrowings at competitive rates.

Concerns remain over many Singapore-listed Reits' access to credit and ability to refinance borrowings at competitive rates.

'The area of focus for S-Reits over the next 12-15 months would remain refinancing issues, with a third of the total $15.6 billion worth of indebtedness due to be rolled over during this period,' DBS Group Research analyst Janice Chua in a note yesterday.

On Friday, Frasers Commercial Trust (FCOT) said that it took a $70 million loan from parent company Fraser and Neave to repay a loan due the next day. FCOT is now in discussions to refinance the $70 million loan and all debt maturing next year.

In response, Standard & Poor's Ratings Services yesterday took the trust off 'CreditWatch' status and said that the outlook is stable.

'The stable outlook factors in Standard & Poor's expectation of FCOT putting in place committed refinancing arrangements for the $550 million debts by March 31, 2009,' S&P said. 'The rating may be placed on CreditWatch negative or lowered if this is not in place. A rating upgrade has become more challenging for FCOT, given that refinancing costs are expected to be higher and that access to equity has declined due to the volatile financial market.'

FCOT shares closed unchanged at 21 cents yesterday.