User Research/Opinions   

Singapore Bonds

Good morning,

These are the yields of the current SSB tranche:

1YR - 1.04%pa
3YR - 1.35%pa

In this case, you may wish to consider this promotion - no lock-in period like SSB.
https://www.hlbank.com.sg/promotion/20170214-001-isavings-account
 

sgng123      ( Date: 03-Jun-2017 11:35) Posted: Put ur money in sg saving bond as it offered flexibility to cash out anytime, unable to predict which company do well. Don bother treat company like commodity, dump if got profit and no blind loyalty. Sg saving bond might offer low yield but is back by sg reserve and capital guaranteed better than corporate debt which might go up in smoke like stock. Sg saving bond only sink when sg got invaded and everything up in smoke. Buy in big market crash, sell when market recover rest of time in sg saving bond waiting for next crash.

 

Put ur money in sg saving bond as it offered flexibility to cash out anytime, unable to predict which company do well. Don bother treat company like commodity, dump if got profit and no blind loyalty. Sg saving bond might offer low yield but is back by sg reserve and capital guaranteed better than corporate debt which might go up in smoke like stock. Sg saving bond only sink when sg got invaded and everything up in smoke. Buy in big market crash, sell when market recover rest of time in sg saving bond waiting for next crash.

 

Banks appeared to be only interested in financing the secured trade-lines (at a discount) in the US$2bio refinancing talks. Unconfirmed details of restructuring send shares and bonds to new lows.

Noble 6.0% Perp Bonds - 84% below par.

Noble 8.75% 2022 Bonds - 63% below par.

john_ric      ( Date: 01-Jun-2017 17:41) Posted: it is better to be safe than sorry... i think. MarcPh      ( Date: 01-Jun-2017 16:15) Posted: Market is confused. Yesterday, Business Times reported that Noble is likey to be able to refinance it' s bank borrowings http://www.businesstimes.com.sg/stocks/brokers-take-noble-group-likely-able-to-refinance-its-borrowings but Noble' s two most important bonds hit new lows today. Noble 6.0% Perp Bonds - 82% below par. Noble 8.75% 2022 Bonds - 60% below par.

 

High Risk REITS - Sabana Shaiá h Compliant REIT

A 4.5% $80mio bond is due to mature three months later but the company' s current assets is less than $30mio (cash $7.5mio, asset-held-for-sale $13mio) and pending a $9mio dividend payout two weeks later. With just three months left, unsecured loans from banks will likely to be expensive and the fire-sale of their industrial properties are not likely to fetch good price in the current dismay industrial property market and completion of sales will likely take 2-3 months.

Taking clue from their 2020 bonds with current yield of 7.5%pa, new bond issues from the REIT will have the price the coupon at 6.5 to 9.5% level. The business model of this REIT is no longer financially viable and REITholders facing lower returns in the long-run. Now, the REITholders are also unhappy with the REITs manager.

http://www.businesstimes.com.sg/real-estate/ceo-of-sabana-reit-manager-quits-changi-south-deal-scrapped

 

Update:

SGD 1 billion parked in HSBC latest riskier SGD AT1 Bonds.
The final yield came down to 4.75%.
Once again, our market is truly flowed with cash.

MarcPh      ( Date: 01-Jun-2017 15:10) Posted: HSBC AT1 NC5 Bonds - SGD Indicative Yield: 5%pa Denomination: S$250,000 Remarks: Three ways to look at it. Honestly, I thought they would offer 6% or more for SGD AT1. Technical nature: These are riskiest bonds from banks with loss-absorption, meaning that if the banks suffer a huge loss resulting in capital adequacy ratios falling below stipulated levels, these Additional Tier-1 (AT1) bonds will be converted to ordinary shares to shore up the banks' balance sheet. Issuer: HSBC is not the safest TBTF (Too Big To Fail) banks in Europe. The coupon for this AT1 puts them in the same league as top German and Dutch banks. Bear in mind that HSBC can be very profitable but they are known to have a high-risk business model which can give wild swings in profitability (bid for AT1 loss-absorption) SGD: They probably assume Singapore market to be really desperate and hungry for SGD high-yields. They just paid 6.875% for another USD AT1 launched in 2016 and with a higher rates environment in 2017, but they are merely paying 4.75 to 5.0% for this SGD issue

 

it is better to be safe than sorry... i think.

MarcPh      ( Date: 01-Jun-2017 16:15) Posted: Market is confused. Yesterday, Business Times reported that Noble is likey to be able to refinance it' s bank borrowings http://www.businesstimes.com.sg/stocks/brokers-take-noble-group-likely-able-to-refinance-its-borrowings but Noble' s two most important bonds hit new lows today. Noble 6.0% Perp Bonds - 82% below par. Noble 8.75% 2022 Bonds - 60% below par.

 

Market is confused. Yesterday, Business Times reported that Noble is likey to be able to refinance it' s bank borrowings
http://www.businesstimes.com.sg/stocks/brokers-take-noble-group-likely-able-to-refinance-its-borrowings
but Noble' s two most important bonds hit new lows today.

Noble 6.0% Perp Bonds - 82% below par.

Noble 8.75% 2022 Bonds - 60% below par.

 

HSBC AT1 NC5 Bonds - SGD

Indicative Yield: 5%pa

Denomination: S$250,000

Remarks: Three ways to look at it. Honestly, I thought they would offer 6% or more for SGD AT1.

• Technical nature: These are riskiest bonds from banks with loss-absorption, meaning that if the banks suffer a huge loss resulting in capital adequacy ratios falling below stipulated levels, these Additional Tier-1 (AT1) bonds will be converted to ordinary shares to shore up the banks' balance sheet.
• Issuer: HSBC is not the safest TBTF (Too Big To Fail) banks in Europe. The coupon for this AT1 puts them in the same league as top German and Dutch banks. Bear in mind that HSBC can be very profitable but they are known to have a high-risk business model which can give wild swings in profitability (bid for AT1 loss-absorption)
• SGD: They probably assume Singapore market to be really desperate and hungry for SGD high-yields. They just paid 6.875% for another USD AT1 launched in 2016 and with a higher rates environment in 2017, but they are merely paying 4.75 to 5.0% for this SGD issue

 

Yes Sir, almost certain they will redeem with the huge cashpile and more, pending asset disposals.

Earlier sharings...........

A Tale of Three Hyflux Perpetual Bonds / Preference Shares

• $300mio 5.75, Callable Jan 2017 - Redeemed
• $500mio 6%, Callable Apr 2018
• $500mio 6% Callable May 2020

The above Hyflux perp bond prices crashed in 2016 due to the launch of 2020 bonds (oversupply). It also reflected the huge > $100mio annual losses in TuasSpring Project which is like a cancer ruining the whole body. It was only until the redemption of the 2017 bonds in Jan 2017, that we saw a recovery in 2018 and 2020 bond prices

 

Summary of Hyflux' s Strategies for the Immediate Future

• Disposal of loss-running TuasSpring power project - Yesterday' s announcement of appointment of bankers for TuasSpring Power Project disposal will be cheered by investors althought it might result in steep loss-recognition.
• Asset-Light - Hyflux continues to dispose stakes in matured project forprofit-recognition eg. Nantong NewSpring, Galaxy NewSpring recently.
• Stronger Cashflow - In the last announced results, Hyflux is sitting on over $300mio with $400mio assets held-for-sale and another $190mio which will be coming in 1H17 due to the disposal of their 50% stake in GalaxySpring project.

 

Probable Moves:

• Hyflux has a sound business model and income from municipal projects. Risk-takers could capitalize in the subdued share prices in the near future due to the potential write-offs in TuasSpring project.
• With a stronger cash pile, the risk-adversed can sleep well with the 2018 bonds which are likely redeemed on first-call date and offers an attractive return of 7%pa (till call-date) with neligible risk of coupon default.
• It is difficult for Hyflux to issue more perpetual bonds right now due to the crash caused by the 2016 oversupply (higher cost of pricing such instruments in the immediate future). Upon the redemption of 2018 bonds, scarcity of the remaining 2020 bonds could generate some additional capital gains and offers a 7%pa yield (till call-date) at current prices.

john_ric      ( Date: 01-Jun-2017 14:00) Posted: HYFLYX 6% CPS ​ ... notce that it exceed $100 again. ​ i think Hyflux ltd will redeem it in 2017  as per schedule. same as genting bond  ​ ...

 

HYFLYX 6% CPS
​ ... notce that it exceed $100 again.

​ i think Hyflux ltd will redeem it in 2017  as per schedule.

same as genting bond 

​ ...

 

The worst might be over for local banks' Offshore & Marine bad debts

Moody' s - Change in outlook to stable from negative for Singapore' s banking system reflects improving growth conditions and stabilizing commodity prices
https://www.reuters.com/article/brief-moodys-says-stable-outlook-for-sin-idUSFWN1IX003

 

I asked my son what he want' s to be when he grows up.

He told me, " Nothing"
I asked him, " Why Nothing?"

Then he told me " Form is Emptiness, Emptiness is Form"
(The correct saying is Emptiness is Form, Form is Emptiness)

Worrying? hahahaa

waters      ( Date: 31-May-2017 00:37) Posted: i learn the gist in buddhism, the only permanence is impermanence.

 

i learn the gist in buddhism, the only permanence is impermanence.

 

Yes, I recently learnt from one of my readings that it is almost futile to try and forecast the fortunes of a company because no one can have 100% certainty what would happen to any company. The company may be doing great currently and also based on its past decade of performance. However, this may not guarantee the company will continue to do as well in future one more decade. Maybe for a short term forecast of one year ahead is already good enough as anything beyond is never 100% certain.

Look at many examples we have. SPH, Osim, Ezion, Ezra, Swiber, Keppel Corp, SembCorp, NOL, Noble Group, Starhub, M1, Sino Grandness, F& N, Second Chance, First Ship Lease Trust, Marco Polo Marine, POSH, Cosco Corp, Creative Technology etc. At some point, all had their well deserved glory and command premium valuations, adored as market darlings and hotly pursued by many investors. But look at these companies now. Some of them have cease to be an ongoing concern or almost as good as dead while others are incurring amounting losses even today and yet others are struggling to keep up their profits to remain profitable as their industry is facing a down-cycle. Who would have predicted many years ahead the downfall or downturn fate in their businesses of any of these ex-market darlings in this list?

Not many businesses can remain profitable forever. Businesses do go through different phases from setting up (infancy) to initial fast growth phase to slow growth phase to maturity phase to slow decline phase to eventual death. Just that those businesses with exceptionally good business economics can last longer through their maturity phase to slow decline phase before eventually dying in the rare cases lasting for more than a century before their inevitable demise when their competitive moat is finally eroded away and replaced by other upcoming stronger new kids on the block.

So, don' t think companies like Coca Cola and MacDonalds will last forever and never die. It is just a matter of time when their economic moats will be slowly eroded away if they fail to constantly keep up their economic moats with the passing of time and changing consumer behaviours. Anyway, some of the large blue-chip US firms are also now facing maturity or slow decline phase in their businesses. Just look at their recent decade of trend in financials and one can see their revenues and profits either slowly declining or struggling very hard to maintain.

One may ascribe this to the US economy still in slow recovery mode at the moment and things should recover fully in years ahead. But, several of these US big blue-chip companies already do face declining economic moats if one dig deeper to why their revenues and profits have either stalled or decline slowly over the past decade. It is not as simple as just a slow moving economy or downturn cycle in their industry.            

john_ric      ( Date: 30-May-2017 13:37) Posted: ya everyone knows the importance of due diligence. but in reality  it is very difficult to know which company will not do well in the next few years even after due dilige. ​ ezion is a good example. before ' o and g' crisis all analysts praised its good managment and balance sheet. who would have predicted that its then share price of more than $3 become below 27 cents today?  and all ezion bonds are in great trouble now. ​ that is the  reason i hesitate to put $250,000 in a single  corporate bond.

 

ya everyone knows the importance of due diligence.

but in reality  it is very difficult to know which company will not do well in the next few years even after due dilige.
​ ezion is a good example. before ' o and g' crisis all analysts praised its good managment and balance sheet. who would have predicted that its then share price of more than $3 become below 27 cents today?  and all ezion bonds are in great trouble now.

​ that is the  reason i hesitate to put $250,000 in a single  corporate bond. 



 

 

Perpetual issuance in Asia ex-Japan surges amid hot bond market
http://www.businesstimes.com.sg/banking-finance/perpetual-issuance-in-asia-ex-japan-surges-amid-hot-bond-market


 

MarcPh      ( Date: 11-May-2017 12:56) Posted: great points! jeremyow      ( Date: 11-May-2017 09:42) Posted: Investing in any corporate bonds of a company requires the same amount of due diligence work as investing in a company shares. Do not assume because a corporate bond is guaranteed for its principal amount and the company has to redeem and pay back the principal amount by the time the bond matures, one is always safe with bonds. If the company is not doing well, it may miss its coupon payments plus risk the possibility that it cannot fulfill its obligation to redeem the principal sum of the bond fully when it matures. Of course, bondholders rank higher than shareholders being a creditor of the company when it winds down and has first of claim to its assets which are liquidated. However having said that, if the liquidated value of the assets of the company is so low that it cannot pay back fully the debts it owes to all its creditors, bondholders may also risk partial or full loss on their principal invested sum. So, if one desires to invest in corporate bond, due diligence to assess whether the company issuing the bond is able to pay the coupons and also redeem back the principal sum of the bond when it matures. A bondholder may think he or she can still sell the bond on the open market if anything goes wrong to protect his/her capital. This is true but not always foolproof. If the company is facing some difficulties in its businesses or undergoing a risk that it may not continue as an ongoing concern due to deteroriating balance sheet, the bond traded price on the open market may also suffer a loss as it is traded at an abnormally lower price factoring in the uncertainties both in bond coupon payments and redemption of the bond principal sum when it matures. In conclusion, nothing is ' bao chiak' (confirmed to make money) when it comes to investments. One has to open his eyes big big and make sure he has assessed the water is really safe and has put on the respective life protecting gear such as life vest before jumping into it.

 

I think there are two factors:

- The currency is JPY. The cost of financing is lower for JPY but the risk of FX movement is huge. Speculators love such bonds because, instead of paying a premium for a FX-forward, a low-risk JPY Bond charges them no premium for a long future-dated settlement.

- The issuer is govt-related or quasi-sovereign (little risk of default), meaning that the bondholder can get " maximum loan" for buying these bonds. These bondholders fork out almost nothing as downpayment/deposits for these leveraged positions and their only risk is the cost-of-financing these bonds: examples in SGD context:

• Risk Factor: Today Raffles City (backed by Capitaland companies) issued new bonds at merely 2.6%. We will consider this issuer as low risk. The same property used to issue bonds under the old name TINCEL Junior bonds and TINCEL Senior Bonds 15 years ago.
• Leverage: Some HDB bonds gives lower returns than Singapore Saving Bonds but speculators can get leverage on HDB bonds and not SSBs.
• Cost of Financing: Fraser Centrepoint issued floating rate bonds which 6M SOR +0.88%. This is popular for investors because they will take a loan for buying these bonds that at (illustration) cost 6M SOR + 0.38% with 90-100% leverage (LTV). The only risk is the default of FCL and death of the investor, otherwise it is a no-brainer.

I reiterate that I discourage the purpose of bonds with leverage for most of us.

john_ric      ( Date: 26-May-2017 11:37) Posted: wonder who would buy this ? only 0.9725%// ---- ISSUE OF JPY6,000,000,000 0.9725% FIXED RATE SENIOR UNSECURED NOTES DUE 2022

 

wonder who would buy this ? only 0.9725%//
----
ISSUE OF JPY6,000,000,000 0.9725% FIXED RATE SENIOR UNSECURED NOTES DUE 2022

 

though tuan sing is an old real estate  its performance has been laclustre. 
​ to put 250,000 sgd under this co is a worry.

​ if it is a retail bond can consider to buy few thousands sgd.

john_ric      ( Date: 26-May-2017 11:30) Posted: ......

 

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