Cromwell Group (ASX: CMW) announced today a €230 million bond issue which matures in 2025. The bonds pay a fixed coupon rate of 2.5% per annum and are convertible into Cromwell stapled securities at a price of A$1.177 which is a 7.5% premium to Cromwell’s closing price of A$1.095 on 21 March 2018.
The proceeds from the convertible bond issue will be used to pay off existing debt with an earlier maturity date and effectively lengthen Cromwell’s weighted average debt maturity as part of its ongoing capital management strategy.
The Cromwell share price was down 1.64% in early morning trade today.
Cromwell, like Charter Hall Retail REIT (ASX: CQR) and other REITs, is attractive to income-seeking investors for its dividend yield which is currently at 7.6% according to Morningstar.
Whilst I like Cromwell, I think this share could be a much better choice for income-seekers over the next few years.
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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.