OUE Limited plans to issue new 7y SGD senior green bonds at a 3.50%* yield

OUE Limited (‘OUE’) plans to issue bonds at an initial price guidance (IPG) of 3.50%, for accredited and institutional investors only. Both the issuer and these bonds are unrated. Proceeds from this issuance will be used exclusive to finance or re-finance new or existing green projects by OUE.

(Note: The official issuer name is OUE Treasury Pte. Ltd., but the bonds are guaranteed by OUE Limited.)

Financial highlights

(Unless otherwise stated: Data is as of FY25 [31 December 2025]; dollar values [$] are in SGD terms; and percentage changes are year-on-year [y/y].)

OUE Limited’s revenues fell -5% y/y to $617m in FY25. Management highlighted various contributors, including (i) the absence of contribution from Lippo Plaza Shanghai, which was divested in December 2024; (ii) lower Hospitality revenues (-4%) following a high base effect in 2024; while (iii) Healthcare revenues were more resilient (+0.3%).

Cost of sales fell by a smaller extent, by -2% y/y to $283m. Marketing and administrative costs rose +8% and +4%, respectively. Importantly, OUE Limited continued to record significant losses arising from the share of results of equity-accounted investees, at -$172m in FY25 (FY24: -$176m)*, primarily due to a weak performance from Gemdale. Implied EBIT fell -32% to $43m in FY25 (FY24: $63m).

(*Note: OUE initially reported a share of the results of equity-accounted investees at -$230m in FY25, but this was revised to -$172m in its final annual report.)

OUE also reported lesser fair value losses on its investment properties, coming in at -$35m in FY25 (FY24: -$164m). Fair value losses in FY25 were primarily from commercial properties in Singapore, though there was no report of Lippo Plaza Shanghai fair value losses in FY25 (after it had contributed in FY24).

Overall, OUE continued to see net losses at -$177m in FY25 (FY24: -$297m), with Gemdale a key contributor to such losses. We note however that some of these line items (e.g. Gemdale, fair value losses on investment properties) are non-cash in nature, while management continues to express confidence in its debt servicing capabilities.

Credit outlook

OUE’s interest coverage remains adequate for now relative to cashflows (Table 1). FY25 operating cashflow (OCF) fell -22% y/y due to lower cash earnings, but remained positive at $207m; meanwhile, free cash flow (FCF) also dropped similarly by -27% to $164m. Consequently, cashflow coverage ratios (using both OCF and FCF) generally remained healthy despite deteriorating slightly in FY25. Meanwhile, EBIT coverage excluding fair value changes and share of results of equity-accounted investees also held up at 1.53x in FY25 (FY24: 1.49x). We nonetheless highlight that OUE’s actual EBIT coverage (which includes non-cash losses from Gemdale) was fairly thin at 0.31x.

OUE’s cash position appears somewhat adequate, with OUE reporting a slightly lower cash position of $324m at end-2025 (end-2024: $600m) as proceeds from the Lippo Plaza Shanghai sale in 2024 were partially used to pare down gross debt. Total borrowings fell slightly (-2%) to $3,070m, though the current portion of borrowings increased from $190m to $769m. Nonetheless, we think near-term liquidity remains adequate as $200m of these current borrowings refer to September 2026 bonds which are being refinanced with this new issuance; furthermore, management stated they are in the process of refinancing these borrowings, and maintain access to $578m of unutilised credit facilities.

OUE’s net gearing (i.e. net debt to equity) worsened from 0.48x in FY24 to 0.56x in FY25. This was due to higher net debt figures, which was in turn driven by lower cash positions (mitigated by lower gross debt) highlighted above. Furthermore, total assets (-6%) and total equity (-8%) also fell in FY25 due to some factors highlighted above, including headwinds in Gemdale.

Overall, OUE’s credit profile remains adequate and re-financeable. We note multiple headwinds in Gemdale (China) as well as smaller headwinds in Singapore commercial real estate. However, these are non-cash items; OUE continued to deliver positive operating cashflows and free cash flows in FY25. Nonetheless, the continued presence of such headwinds alongside its slightly high debt levels means that OUE can be considered more leveraged than some of Singapore’s stronger property peers (e.g. UOL).

Table 1: Interest coverage metrics

Bond comparison

This new issue has an IPG of 3.50%. Even accounting for the final price guidance (FPG) coming in lower than the 3.50% IPG, this represents higher levels of yield compared to many other property-company bonds in Singapore (Table 2).

We find this new issue interesting for those with slightly higher risk appetites. While OUE continues to face persistent headwinds especially from Gemdale in China, we think the likelihood of default remains low as underlying cashflows remain sufficient to cover its interest payments.

Table 2: Bond comparison

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in HOBEE 4.350% 11Jul2029 Corp (SGD) and WHURSP 4.800% 04Nov2030 Corp (SGD). The analyst who produced this report holds NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.