S$0.37-CITS.SI
It was unfortunate investors ignored news that CitySpring through Basslink, bought back on Sept 30th A$170 mln worth of bonds issued by the latter at A$155 mln, ie there should be a gain to be booked in, interest expense correspondingly reduced and cash flow boosted by the release of the A$20 mln escrow account..
The 1- cent drop on Oct 3rd to 38 cents underscored the extent of the loss in confidence in this business trust. And Basslink has been a headache since CitySpring bought it just over 4 years ago.
(The funds for the redemption came from the S$204.8 mln proceeds from the rights issue.)
Hopefully, news that S&P has removed the Negative outlook rating and reinstated it to Stable will be better received. (The overall rating remains at BBB minus.)
Key point is that CitySpring’s cash flow is stable enough to more than enable it to continue with its distribution policy, even though with the continued poor stock market performance, prospects for growth via acquisition are not bright.
Treat CitySpring then as a utility stock / trust, offering yield of >7%.
BUY
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