CLS Holdings Plc 5.5% 31/12/2019

Category: Fixed Interest

28-08-2012

Multinational property company CLS Holdings Plc is issuing a seven year sterling bond with a 5.5% coupon.

Though the issue does not carry a rating, we feel this bond looks good value against the 1% offered by the benchmark Treasury gilt. With the general consensus forecasting a long period of low interest rates, the issue looks attractive.

The senior ranking of the bond combined with covenants (see attached) and the steady course steered by CLS’s management through the last property market fall (they sold 40% of the Group’s property portfolio between 2006 and 2008) suggests that the bond offers a good risk/return ratio.

We are taking orders for settlement until the 4th of September, however we expect the issue to close early due to strong demand. If you would like to purchase some bonds at par (the minimum size is £2,000 and they trade in multiples of £100 thereafter), please register your interest with your stockbroker or by contacting us on 200 75181 or email to dealers@gam.gi.

Similar issues have traded above par after admission to trading in the secondary market and with a target raising of just £50m, we expect this bond to do the same.

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