SGREIT's MTN Program receives rating upgrade with new refinancing plan

S&P raises long-term rating to BBB-.

Standard & Poor's Ratings Services has raised its long-term rating on the medium-term notes (MTN) program of Singapore-based Starhill Global REIT MTN Pte. Ltd. to 'BBB' from 'BBB-'.

"We also assigned our long-term ASEAN regional scale rating of 'axA' to the Singapore dollar (S$) 2 billion program. At the same time, we raised the long-term rating on the S$124 million 2015 notes issued under the program to 'BBB' from 'BBB-', and assigned our long-term ASEAN regional scale rating of 'axA' to the notes," said S&P.

Starhill Global REIT MTN Pte. Ltd. is a wholly owned subsidiary of HSBC Institutional Trust Services (Singapore) Ltd. in its capacity as trustee of Starhill Global Real Estate Investment Trust (SGREIT: BBB/Stable/--; axA/--).

"We upgraded the MTN program because we expect SGREIT's proportion of secured debt to total assets to be about 8%-10% over the next two years, after the REIT refinances about S$449 million in secured debt in September 2013. This ratio was about 25% in 2012. At the same time, we expect the proportion of net operating income from encumbered assets to fall to about 30% of total net operating income. This ratio was about 60% in 2012. SGREIT's Ngee Ann City property in Singapore will become unencumbered when the company refinances the debt," said S&P on what drove the upgrade.

SGREIT announced that it has arranged unsecured financing of about S$700 million from a group of banks. About S$650 million of this financing is committed. SGREIT intends to use most of these facilities to refinance a S$284 million term loan and ¥12.5 billion term loans maturing in September 2013, and about S$64 million of unsecured revolver credit facilities maturing in December 2013.

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