Bonds secured by commercial property in Canary Wharf have fallen to their lowest level in three years, Bloomberg reports. The fall is due to concerns that the debt may be bought back at a lower value than the market price.
The £954.3m class A1 securities decreased in value by 5 per cent after the issuer, Canary Wharf Finance II Plc stated that it would redeem £577.9m of the notes leaving investors waiting to discover how much they will receive for the debt.
Proceeds from the recent sale of 10 Upper Bank Street, to a partnership including a subsidiary of insurance company China Life, will be used to repay the securities.
The 250,000 sq ft tower is one of the properties previously backing the debt.
The Canary Wharf bonds, which rose as high as 129 per cent of face value in 2013, are backed by six prime properties in the Docklands district, including the offices of Morgan Stanley and Citigroup Inc.
According to a statement issued by the bond issuer, the borrower deposited £168.7m in an escrow account, which is managed by Deutsche Bank AG, for the bond redemption.
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