Moody's Investors Service has upgraded Prologis European Properties' (PEPR) corporate credit rating to Baa3, with stable outlook, from Ba1.

'The Moody's rating upgrade strengthens our financial position, reduces our costs and further enhances PEPR's access to the broader capital markets,' said William E. Sullivan, chief financial officer of Prologis. 'With its return to investment grade PEPR will realize $13 mln (EUR 9.2 mln) in annual interest expense savings. The majority of these savings will begin to be realized in late-October.'

PEPR's rating upgrade to Baa3 is a result of its announcement to offer up to EUR 97.5 mln to significant existing unit holders. This upgrade immediately reduces the borrowing margin on PEPR's EUR 248 mln senior unsecured term loan by 25 basis points and the borrowing margin on its EUR 50 mln senior unsecured revolving credit facility by 15 basis points.

More significantly, the interest rate on PEPR's EUR 494 mln Eurobond will decrease by 175 basis points to 5.875% from 7.625% after the October 23, 2011 annual reset date.