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Goodman announces changes to its capital management structure and confirms rating upgrades

Tuesday, 23 May 2017

Goodman Group (Goodman or Group) today announced a number of changes to its capital management structure and confirmed rating upgrades. 

Key capital management highlights include: 

  • Improved credit rating from both S&P BBB+ and Moody’s Baa1   
  • Lower gearing target confirmed, now 0-25% (from 25-35%)
  • Certain US 144A bonds and banking covenants to be amended

As the exchange offer and consent solicitation for US$1 billion of its US 144A bonds that mature in 2021 and 2022 has reached majority acceptance and certain US 144A bond and bank covenants have met the requirements to be amended, Goodman has formally reduced its gearing targets in its Financial Risk Management Policy (FRM) from 25-35% to 0-25%. This change brings the FRM in line with the Group’s current operating practice. 

Goodman Group’s Chief Executive Officer Greg Goodman said: “As part of the Group’s capital management strategy, Goodman has been focussed on reducing our financial leverage in the business to counterbalance our active earnings. These changes provide the Group with greater operational and balance sheet flexibility for the long term.” 

Key changes to the US 144A bond and bank covenants included tightening the leverage covenant by 5% and removing the unencumbered real property assets test. 

As a result of its gearing policy  changes, both S&P and Moody’s have confirmed upgrades to Goodman’s credit rating from BBB to BBB+ (S&P) and Baa2 to Baa1 (Moody’s).

The level of the Group’s gearing will be determined with reference to the mix of earnings and credit ratios consistent with the rating of the Group. There are no changes to the Forecast FY2017 Operating Earnings of the Group.