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Singapore Bonds

Going to be like Lehman Brothers situation? This is going to be mind bogging.

MarcPh      ( Date: 14-Jun-2017 14:48) Posted: Market whisper: Investors threatening to sue arranging banks for over 60% drop in Noble' s bonds issued 3 months ago.

 

Taking clue from this week' s drop in CH Offshore share price and recovery in Falcon' s share price... ...

This rumour might be true:
Falcon Energy calling for a bond holders meeting on the 14th of June which may or may not result in buying some time for the company to dispose of its majority stake in Chuan Hup Offshore, the only, disputably, &ldquo debt-free&rdquo mainboard listed O& G company in Singapore. https://tradehaven.net/2017/06/12/singapore-bonds-fact-checking-the-news/

 

 

Market whisper: Investors threatening to sue arranging banks for over 60% drop in Noble' s bonds issued 3 months ago.

 

Sembcorp low-balled the market today, today' s issue unlikely to be be a huge issue.

MarcPh      ( Date: 14-Jun-2017 09:59) Posted: For example semb corp is issuing a NC3 (years) SGD perp bonds in Singapore today. Indicative yield is about 4% but likely priced below that AND THE STEP-UP COUPON is in Year-5, not Year-3. . They are probably inspired by Starhub' s recent 3.95% NC5 perp issue. Wait a minute, I agree these are very safe companies but giving me < 4% for a perp raises my eyebrows even though I used to buy Hyflux 4.8% perp but the STEP-UP was in Year-2, not 5 years. Bankers are likely giving lots of leverage on these perp issues and while i agree that these quasi-sovereign perps will not likely default, when the bond prices crash by 20%, investors with leverage positions will still face margin calls. At the end of the day, we bear the risks.

 

The former chief executive of troubled Hong Kong-based commodity merchant Noble Group, Yusuf Alireza, has issued a claim against the firm' s founder and emeritus chairman Richard Elman over alleged unpaid share payments worth millions of dollars.

In a writ of summons issued on June 13 to Hong Kong' s High Court, Alireza claims that Elman as well as a company called Fleet Overseas (New Zealand), which is affiliated with Elman, failed to pay out shares of Noble Group following Alireza' s departure of the company in 2016. The document claims the value of the unpaid shares via two batches to be S$79.2 million ($57.3 million), and it also demands " damages for late delivery."

http://uk.reuters.com/article/uk-noble-court-idUKKBN1950A1

MarcPh      ( Date: 10-Jun-2017 12:26) Posted: Noble shares closed the week below 30cents as Mitsubishi UFJ Financial Group is reportedly arranging a USD two billion 364 day-facility to replace the USD 1 billion syndicated loan for Noble, at the following terms: USD 800 million uncommitted tranche 185 basis points over LIBOR. USD 1.2 billion committed tranche 195 basis points over LIBOR This is a higher cost to Noble of lending for secured loan. Meanwhile, bond prices had stopped dropping by the end of this week. NOBLE GROUP&rsquo S DEFORESTATION RISKS FURTHER SINKS THE SHIP https://chainreactionresearch.com/2017/06/07/the-chain-noble-groups-deforestation-risks-further-sinks-the-ship/   MarcPh      ( Date: 06-Jun-2017 09:45) Posted: If rumours about bankers' demand for bond consent-solitication are true (or not), in order to extend lending facility, Noble should halt trading to clarify, instead of seeing the ordinary shares falling below 30 cents like now. Noble Group is said to ask lenders to extend credit facility " Pricing of unsecured bonds and loans reflects the market perception that probability of default is high," said Rick Mattila, international head of market strategy at MUFG Securities Asia. http://www.businesstimes.com.sg/companies-markets/noble-group-is-said-to-ask-lenders-to-extend-credit-facility

 

Let me clarify the meaning of offshore bond means " bonds issued by Offshore oil& gas counters like Ezra/Emas, Swiber, Swissco, Pacific Radiance etc"

 

For example semb corp is issuing a NC3 (years) SGD perp bonds in Singapore today. Indicative yield is about 4% but likely priced below that AND THE STEP-UP COUPON is in Year-5, not Year-3. . They are probably inspired by Starhub' s recent 3.95% NC5 perp issue.

Wait a minute,
I agree these are very safe companies but giving me < 4% for a perp raises my eyebrows even though I used to buy Hyflux 4.8% perp but the STEP-UP was in Year-2, not 5 years. Bankers are likely giving lots of leverage on these perp issues and while i agree that these quasi-sovereign perps will not likely default, when the bond prices crash by 20%, investors with leverage positions will still face margin calls. At the end of the day, we bear the risks.

 

 

Good evening.
For the examples that you cited, our friends can take note of the following:

- If you are buying offshore bonds, take those that are partially state-owned and guaranteed by state or state-related enterprise or Asian Development Bank, the yields are quite decent.
- BUT BUT BUT BUT BUT if you own a bond that is issued by a state-owned company, please ensure that there is a CHANGE-OF-CONTROL COC clause. NOL Bonds crashed heavily after being sold to the french because NOL are not state-owned and several of their bonds do not contain COC clause.
- Lastly i wish to comment on the yields. DBS Perp yield is about low-3 now. There are many investment-grade safe bonds that are either of similar yield but not perpetual.

Just my take.

pnuklis      ( Date: 13-Jun-2017 13:27) Posted: Best unsecured bonds in Singapore are DBS perpetual 4.75% which are safe and likewise the OCBC also. Offshore bonds are the worst with total loss. Even bonds of company like that of Noble, Olam are also questionable.

 

Best unsecured bonds in Singapore are DBS perpetual 4.75% which are safe and likewise the OCBC also. Offshore bonds are the worst with total loss. Even bonds of company like that of Noble, Olam are also questionable.

 

Lippo priced the new bonds at 6.6%
Issue size: $120mio

MarcPh      ( Date: 12-Jun-2017 16:49) Posted: This is the second perp bond from Lippo in less than a year. Feels like they are rushing to raise hybrid debts. Will they change domicile to Indonesia soon after issuing more debts in Singapore? Hyflux is more sincere in their perp bond offerings (similar 6% coupon): Hyflux perp bonds are cumulative. If they don' t pay coupons, they still have to pay it in future. Lippo' s two perp bonds are non-cumulative. (Bank AT1 bonds have to be non-cumulative due to regulations to qualify as capital). Both Lippo and Hyflux are not banks. Coupon reset is an important feature in corporate perp bonds. Hyflux' s self imposed penalty is SOR + initial margin + 2%. Lippo perps' reset is just SOR + initial margin.   john_ric      ( Date: 12-Jun-2017 15:49) Posted: Thanks Marc. ​ precisely due to the " threat" , so i don' t feel comfortable to buy its bond even though the yield is very attrractive.

 

Noble shares stablizes as company explores selling oil business in US.

Noble' s three plain vanilla USD bonds traded at historical lows today as " lenders including Natixis, Citigroup and MUFG have appointed legal advisers as they consider Noble&rsquo s request for a six-month extension. If Noble is forced to repay $600m it has drawn from the facility, which provides essential working capital for its US business, it could be forced into a debt restructuring or liquidation, analysts say" https://www.ft.com/content/86d8474a-4c3e-11e7-a3f4-c742b9791d43

 

I think Lippo' s management will receive overwhelming response if they had opted to issue a 6% retail perp bond offering for kachang putehs like Marc - lower coupon and larger placement.

 

This is the second perp bond from Lippo in less than a year. Feels like they are rushing to raise hybrid debts. Will they change domicile to Indonesia soon after issuing more debts in Singapore?

Hyflux is more sincere in their perp bond offerings (similar 6% coupon):

• Hyflux perp bonds are cumulative. If they don' t pay coupons, they still have to pay it in future. Lippo' s two perp bonds are non-cumulative. (Bank AT1 bonds have to be non-cumulative due to regulations to qualify as capital). Both Lippo and Hyflux are not banks.
• Coupon reset is an important feature in corporate perp bonds. Hyflux' s self imposed penalty is SOR + initial margin + 2%. Lippo perps' reset is just SOR + initial margin.

 

john_ric      ( Date: 12-Jun-2017 15:49) Posted: Thanks Marc. ​ precisely due to the " threat" , so i don' t feel comfortable to buy its bond even though the yield is very attrractive.  MarcPh      ( Date: 12-Jun-2017 13:30) Posted: The indicative yield of 6.875% is very fair, considering shareholder' s dividend is about 6-9% depending on your recent entry price. This issue might be priced at 6.5% level or lower. They are financing at higher costs and shareholders unwilling to increase exposure because the management had not withdrew their threat/intention to transfer listing from SGX to Indonesia. http://www.straitstimes.com/business/companies-markets/lippo-group-may-consider-moving-singapore-listed-reits-to-indonesia-say

 

Thanks Marc.
​ precisely due to the " threat" , so i don' t feel comfortable to buy its bond even though the yield is very attrractive. 

MarcPh      ( Date: 12-Jun-2017 13:30) Posted: The indicative yield of 6.875% is very fair, considering shareholder' s dividend is about 6-9% depending on your recent entry price. This issue might be priced at 6.5% level or lower. They are financing at higher costs and shareholders unwilling to increase exposure because the management had not withdrew their threat/intention to transfer listing from SGX to Indonesia. http://www.straitstimes.com/business/companies-markets/lippo-group-may-consider-moving-singapore-listed-reits-to-indonesia-says john_ric      ( Date: 12-Jun-2017 11:18) Posted: to buy bonds company must be rock-solid. Lippomall steady??

 

The indicative yield of 6.875% is very fair, considering shareholder' s dividend is about 6-9% depending on your recent entry price.
This issue might be priced at 6.5% level or lower.

They are financing at higher costs and shareholders unwilling to increase exposure because the management had not withdrew their threat/intention to transfer listing from SGX to Indonesia.
http://www.straitstimes.com/business/companies-markets/lippo-group-may-consider-moving-singapore-listed-reits-to-indonesia-says

john_ric      ( Date: 12-Jun-2017 11:18) Posted: to buy bonds company must be rock-solid. Lippomall steady??

 

the risk level reflects on the yield which the company is offering you.... do you get that type of % from SIA HDB etc?

i' ve some offer > 10% on foreign companies which i know nuts about their background...all depend on individual' s appetite

 

to buy bonds company must be rock-solid. Lippomall steady??

 

Lippomall perp IPO @ 6.875%

 

Those bonds are not that attractive. You didn' t miss anything.

• Just $200mio listed because they set the coupon at 3.95% (pathetic)
• Don' t listen to them about what billion dollars of orderbooks, never trust these numbers because the orderbooks is only valid if they really give the indicative 4.25%, which they didn' t

jm2212      ( Date: 10-Jun-2017 12:26) Posted: Got nothing from both banks....need to sign the bond trading form with dbs so that won't miss again in futurr MarcPh      ( Date: 10-Jun-2017 12:15) Posted: Still congrats to you, they are trading above par. If you not happy with the yield, you can get back your money without loss/profit after commission

 

Noble shares closed the week below 30cents as Mitsubishi UFJ Financial Group is reportedly arranging a USD two billion 364 day-facility to replace the USD 1 billion syndicated loan for Noble, at the following terms:

• USD 800 million uncommitted tranche 185 basis points over LIBOR.
• USD 1.2 billion committed tranche 195 basis points over LIBOR

This is a higher cost to Noble of lending for secured loan. Meanwhile, bond prices had stopped dropping by the end of this week.

NOBLE GROUP&rsquo S DEFORESTATION RISKS FURTHER SINKS THE SHIP
https://chainreactionresearch.com/2017/06/07/the-chain-noble-groups-deforestation-risks-further-sinks-the-ship/

 

MarcPh      ( Date: 06-Jun-2017 09:45) Posted: If rumours about bankers' demand for bond consent-solitication are true (or not), in order to extend lending facility, Noble should halt trading to clarify, instead of seeing the ordinary shares falling below 30 cents like now. Noble Group is said to ask lenders to extend credit facility " Pricing of unsecured bonds and loans reflects the market perception that probability of default is high," said Rick Mattila, international head of market strategy at MUFG Securities Asia. http://www.businesstimes.com.sg/companies-markets/noble-group-is-said-to-ask-lenders-to-extend-credit-facility   ShowMeMoneyp      ( Date: 05-Jun-2017 19:02) Posted: If they find a white knight at all, the $400M bond will get a hefty haircut.   There is no way they are going to pay full.   Smarter still will be to buy up the bond at low low price before any announcement - Is that something legal or ethical?