How GLP used Panda bonds and courted investors to cut debt

Raising funds while paying off debt after a take-private buyout is no mean feat. GLP global treasurer Edwin Tey explains how he managed to pull it off.

In 2010, Global Logistics Properties (GLP) listed on the Singaporean stock market.

GLP is Asia’s largest industrial and infrastructure provider - it owns warehouses that it leases out to clients like Alibaba-backed Best Logistics and Chinese e-commerce platform

Last January, a consortium of Chinese institutional investors bought out shareholders (including Singapore’s sovereign wealth fund GIC) in a $11.6 billion deal. But the take-private event saddled it with more than $2 billion in incremental debt.

To make matters worse, credit rating agency Moody’s issued a negative rating. GLP was in the middle of a growth spurt and made an acquisition before going private.

Finding money so that GLP could pay off existing debt while also raising funds meant a busy year.

“It was quite an experience,” GLP global treasurer Edwin Tey said. “I needed to be able to think long term and know how I wanted to envision the new capital structure.”


GLP accrued debt at a point of inflection in the logistics real estate sector – most firms were building a global presence and the Singaporean firm could not rest on its laurels as the leading warehouse owner in China and Japan.

The company’s chief investment officer calls it the triple threat of  “globalization, demographics and technology”.

Millennial consumers and app-based platforms led to increased demand for last-mile and faster delivery solutions - all the goods on burgeoning e-commerce websites basically need to be stored somewhere.

Meanwhile, many companies now look to target consumers globally.


Tey explained that being an owner and an operator placed stress on the company’s balance sheet and made it susceptible to debt/credit markets - it could be a hindrance to growth.

Business will naturally take a hit due current trade tensions, Tey admits, but GLP is monitoring them. Tey is confident that the company will find the correct investment partners and operate in the right markets to ensure diversified and reliable annual income.

“Being investment grade and having sovereign wealth funds, big pension funds and life insurance companies as investors to our funds means they can help us ride out the whole seven to ten years together with us,” Tey said.In the meantime, in a growing trend, institutional investors are willing to invest in funds raised by reputable private companies.

Such institutional investors indirectly helped GLP invest in places like Brazil, the United States and Europe.


Moody’s decision to downgrade GLP must have been disappointing. Any further downgrade meant junk bond territory.

GLP group treasury had to find cheap ways to pay off the debt.

A deleveraging plan to shave off $2 billion was announced in March but group treasury had already sprung into action.

GLP inked an onshore Belt & Road bond – a renminbi-denominated bond promoted by the Chinese government to finance projects connecting Asian and European trade corridors.

“Trying to get the approval is the biggest challenge and it’s not easy,” said Tey.

Tey’s team also issued panda (or onshore renminbi) bonds, low-rate debt in Europe and Japan and carried out refinancing for ¥45 billion ($405 million) maturing debt by taking out five-to-seven year bank loans achieving 2% in interest savings.

Private real estate funds were created in Japan and Europe.

By November in the year, Moody’s revised its outlook. Treasurers in a similar pickle need to be ready to be think outside the box, be opportunistic and have reliable banking partners, Tey said.


While there may not be any annual reports to file, group treasury needs to monitor the leverage in various GLP projects to make sure it matches with what investors expect.

“We need to make sure we understand the business enough to know the capacity of our assets to repay the debt and maximise the leverage when the opportunity is right.”

“There's a lot of moving parts to the business so we need to look at not only what is on the balance sheet but what is in the funds as well.”

“That’s where treasury can add value.”


Tey’s team has more responsibilities now. The team now manages relations with rating agencies and public bond investors as well.

In treasury infrastructure, Tey invested in SAP Concur to manage accounts payable data and he’s looking at ERP enhancements so that internal requests for funds can be moved through a single platform with payments carried out via API links.

“Some of the enhancements are at the Enterprise Resource Planning (ERP) level so there’s more straight-through processing, less use of paper forms, less manual work required etc.,” he said.

While there’s still $2 billion in prior debt that GLP needs to manage, Tey feels the team is on track to pay it off.

The logistics-focused real estate developer turned fund manager expects its portfolio to grow rapidly.

“We will continue to grow at a fast pace so we need to be able to harness the power of technology to bring more value to the work that we do.”

“Twenty months on, I think we are in very good shape but there is still more work to be done.”


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