User Research/Opinions   

Singapore Bonds

About $200mio placed out from NTUC' s subsidiary Mercatus at 2.8%pa
Really better than HDB bonds

No PB rebate for many RMs, they only made money from the leverage facility.
 

 

The Malaysians played punk and confirms default. Nam Cheong have the capability to serve at least the coupon payment and/or redemption of August 2017 bond due. As expected, they will not opt to suspend their shares for an extended period of time to triggering the trading-suspension put clause which will prioritize bondholders over their trade-creditors.

There is not even a debt extension possibility so liquidation is a better option for this company because market cap is just $40mio.  Any proposed share-for-bond  swap by the Malaysians will be quite worthless and low-ball. Let' s put this in perspective, the business has in excess of $360mio outstanding, do you think the 50% controlling-shareholders will offer a fair dollar-for-dollar swap and raise the market cap 10-folds to $400mio and they themselves become a 5%-shareholder?

http://infopub.sgx.com/FileOpen/NCL_RESTRUCTURING%20AND%20COMPANY%20DEBT%20STANDSTILL.ashx?App=Announcement& FileID=462171

(The controlling shareholder has some shares pledged to UOB.)

MarcPh      ( Date: 13-Jul-2017 10:05) Posted: Nam Cheong to meet noteholders on July 19 to update them on restructuring http://www.businesstimes.com.sg/energy-commodities/nam-cheong-to-meet-noteholders-on-july-19-to-update-them-on-restructuring Secured lenders has priority over Nam Cheong' s unsecured bondholders in debt-repayment. Actual Debt restructuring usually requires trading suspension. The " suspension of trading Put" clause in Nam Cheong bonds will raise the bondholder' s priority on debt repayment. When that clause is triggered, Bondholders can legally impound the revenue received NC' s bank accounts and effectively, they will rank higher than all trade/business creditors (usually insecured). If you are a supplier or vendor to NC, there is no way that you can ever get paid until NC reimburses the bondholders fully. BONDHOLDERS BEWARE: So on surface, a PROLONGED trading suspension for NC is as good as a death sentence to NC. NC looks very likely to demand bondholders to waive the " suspension of trading put" clause by threatening to wind-up ( trust me on this) BUT agreeing so, is as good as asking bondholders to give up their best insurance/protection. MarcPh      ( Date: 24-Apr-2017 08:53) Posted: Nam Cheong announced intention to restructure debts on Saturday/Sunday midnight but no tangible plans disclosed. http://infopub.sgx.com/FileOpen/Group%20Restructuring.ashx?App=Announcement& FileID=449569   Unsecured bonds due for maturity: NCLSP 5.000% 28Aug2017 - S$90mio (trading at appx 60% below par) NCLSP 6.500% 23Jul2018 - S$75mio (trading at appx 70% below par) NCLSP 5.050% 26Aug2019 - S$200mio (trading at appx 75% below par)   Current Market Cap - appx S$40mio

 

SINGAPORE, 19 July 2017 &ndash DBS Group Holdings Ltd (&ldquo DBSH&rdquo ) has successfully priced the issue of USD 500 million floating rate green bonds due 2022 (the &ldquo Bonds&rdquo ) under its USD 30 billion Global Medium Term Note Programme (the &ldquo Programme&rdquo ). This is DBSH&rsquo s first green bond issuance. 
 
The Bonds will bear a quarterly coupon of 3-month USD LIBOR + 0.62%. The Bonds are expected to be issued on 25 July 2017. 
=============

​ green bonds ?
 

 

SoftBank' s US$4.5bn Perpetual Bond Offer Twice Oversubscribed
http://asia.nikkei.com/Business/Companies/SoftBank-s-4.5bn-bond-offer-twice-oversubscribed
Almost 1 trillion Yen applied.

Softbank 6.875% USD Perp bond trading above 101.5 today.
 

 

Market whisper - likely to hear news of the Tuaspring plant divestment soon.

MarcPh      ( Date: 25-Apr-2017 09:35) Posted: 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.

 

Why Change-of-Control (COC) Clause is important at times

When NOL was sold to the French, their bonds crashed from 101 to 80 because NOL was no-longer majority owned by Temasek.
Today, we see GIC in talks with Chinese investors to offload Global Logistics Properties (with conflicts of interests by the GLP CEO in this matter) and GLP bonds crashed from 105 to 96 since GIC indicated desire to offload their stake in GLP.

Investors will perceive higher risk when a company is no longer being-majority held by our sovereign funds.
GLP is a relatively highly-geared company. For shareholders of GLP, one would expect higher cost of refinancing for GLP' s properties, going forward.

 

Side note:
If one day City Development has major restructuring plans, eg. issue rights, splits into two or more companies (like HP), spin off major assets, it is likely that the company will need to reimburse the preference shareholders for their approvals (due to the conversion features in the preference shares) in an  Consent Solicitation exercise or fully redeem these preference shares.

MarcPh      ( Date: 22-Jun-2017 14:35) Posted: paiseh, post it here more relevant A perpetual 4D ticket... ...Pay Once and bet until you win. Background I was looking at properties and realized that I do not have enough money and current rental yields is less than 3%pa or less than 1%pa if you include bank loan interest, maintenance and depreciation. In the midst of research, I found a substitute that requires a smaller quantum and offers the same benefits and regular income stream like property. PS: Of course buying a property is good for long-term capital appreciation, eg. 100% in 10-20 years. I am not telling you not to buy properties. But this substitute appears to be very suitable for your kids or seniors in your family to park their savings.                              City Development Preference Shares (Retail) CityDev NCCPS It was issued about 14 years ago. City Dev issued it to utilize some tax-credits. THERE IS NO REDEMPTION DATE for this Preference Share, not even a call-date (to redeem). This preference share will might never be redeemed. Then what is the catch?                                              Benefits For every share, it gives 3.9 cents annually: If it never redeems, this is a good income for CPF-OA account (only 2.5% return). It is good for my children savings (only 0.1% from POSB). It is good for retirement (City Development is reliable). The current price is $1.12-$1.14, with a 3.9 cents payout annually, the yield is about 3.5%pa.                                              If the company triggers the redemption (tomorrow, next month, next year or next decade), the payout is $0.64 per share + 0.136 of City Development& rsquo s ordinary share. City Development ordinary share is worth about $11 now, so any redemption NOW will see a $2.13 payout (100% gain) If City Development ordinary share crashed to $3.50 (Armageddon), the redemption payout will be $1.12 (current cost). You can probably buy a lot of blue-chips cheaply with the payout when City Development crashes to $3.50.                                              Over $330mio of this preference shares was issued. Today, it is widely held by estates, rich people, retirees. Think of it this way, this preference share is like a property with a hassle-free + tax-free rental income of 3.5%pa with an EN-BLOC potential of 100% payout gain. This is easier than buying a property.                                              Frequently Asked Questions 1: What if City Development redeems their preference shares at current level?   Congrats, it is a windfall.        2. What if City Development redeems their preference shares when their ordinary shares crashed?   If City Development ordinary shares crashed to $3.50 or below during a recession, I think a lot of blue-chips will be priced at a small-fraction of today' s value. The money from redemption payment can be used to buy other blue-chips eg. Banks, cheaply.                                              3: What if City Development never redeem their preference shares? - It is still a good 3.5% tax-free income (comparable with rental incomes). - In 2007, the company hinted about the redemption and the preference share shot up to $2. - In 2012, the company hinted about redemption and the preference share shot up to almost $1.20. - There are always chances to sell for a decent profit even without redemption. - The historical low is $0.80 (for only a few days). 80% of the time, this share trades at appx $1.10 level and 10-15% of the time, it trades higher than that. (Offering a profitable exit before redemption)                                              Pros: - Tax-free regular income and hassle-free with potential capital gains when redeemed - Investment grade company like our local banks, safer than Capitaland - Better than insurance. Bonus payouts for insurance happens only with our death, and we don& rsquo t need to bet our lives to enjoy a bonus payout. - This is the only financial instrument of such nature in Singapore from a reputable issuer. Most people or estates, just buy and keep with their spare cash. Cons: - City Development might never redeem it (forever) - City Development might default on the coupon (non-cumulative) but the cost of paying the interests annually is less than $13mio (chicken-feet) for City Dev. If they cannot pay preference shares dividend, all dividends for ordinary shares will automatically cease for that year. - There are only small quantity available for sale daily (good sign), you have to accumulate this counter slowly. - If you need the money urgently (to cash out), you might lose a bit of capital (or make a tiny bit).                                              DISCLAIMER: Lose money don' t blame me. I am not financially trained, broke and don' t even have a bachelor' s degree.  LOL I intend to cheat my Mother-in-law money into this counter and park my kids' s savings there Give your kids this perpetual 4D ticket. MarcPh      ( Date: 19-Jun-2017 17:42) Posted: Hi John, Once a upon a time, HDB bonds used to yield 3-4%pa*. So there was a retail market for HDB or JTC bonds 15-20 years ago. These days, bond-yields had dropped so much that financial institutions (insurers and banks) are the main buyers of HDB bonds. These bonds are usually rated AAA, just like Nowegian or Singapore govt bonds and being a " technically loss-making" on paper, HDB bond offers 25-30bp more than other AAA issues. Under BASEL III framework, such AAA bonds are considerd high-quality liquid asset for their liquidity ratio coverage. http://www.bis.org/publ/bcbs238.pdf Yes, HDB bonds ain' t really for the man on the street or even the rich individuals. Of course, if you love speculating, I heard of rich people who got 100% leverage for HDB bonds (buying an insurance policy as collateral) and just betting on the difference between cost-of-financing (SOR) and the HDB bond coupon. SOR was negative 1-2 years ago. *I recommended something of 3-4% yield in another thread on 16th June. HDB is just 2.2%pa for 10-15 years. http://sharejunction.com/sharejunction/listMessage.htm?directAccessMessageID=1382189

 

$300mio issued at 5.2%. They kept their words and launched at 5.2%
Commendable.

MarcPh      ( Date: 12-Jul-2017 10:17) Posted: SUPER HOT CAKE!!! Better than Netlink Trust! Issuer: ARA Asset Management Ltd Issuer/Bond Rating: Unrated Currency: SGD Rank:  Subordinated Perpetual Securities Tenor: Perpetual, callable in 5yrs Coupon: Indicative 5.5% area (expect final coupon 5- 5.2% area) Coupon Stepup and reset: 300bps step-up & reset from year 7 Denomination: SGD250K Use of Proceeds: General corporate purposes, refinance existing borrowings, financing investments, working capital Change of Control: Issuer call at Par if John Lim, The Straits Trading Company Ltd, Cheung Kong Property Ltd. Warburg Pincus and/or Avic Trust cease to own in aggregate 30% shareholding interest of the Issuer Dividend Pusher and Stopper: Yes Listing/Clearing: SGX-ST/CDP Lead Managers & Bookrunners: OCBC, DBS, UOB

 

Nam Cheong to meet noteholders on July 19 to update them on restructuring
http://www.businesstimes.com.sg/energy-commodities/nam-cheong-to-meet-noteholders-on-july-19-to-update-them-on-restructuring

Secured lenders has priority over Nam Cheong' s unsecured bondholders in debt-repayment.
Actual Debt restructuring usually requires trading suspension.
The " suspension of trading Put" clause in Nam Cheong bonds will raise the bondholder' s priority on debt repayment. When that clause is triggered, Bondholders can legally impound the revenue received NC' s bank accounts and effectively, they will rank higher than all trade/business creditors (usually insecured). If you are a supplier or vendor to NC, there is no way that you can ever get paid until NC reimburses the bondholders fully.

BONDHOLDERS BEWARE:
So on surface, a PROLONGED trading suspension for NC is as good as a death sentence to NC.
NC looks very likely to demand bondholders to waive the " suspension of trading put" clause by threatening to wind-up ( trust me on this) BUT agreeing so, is as good as asking bondholders to give up their best insurance/protection.

MarcPh      ( Date: 24-Apr-2017 08:53) Posted: Nam Cheong announced intention to restructure debts on Saturday/Sunday midnight but no tangible plans disclosed. http://infopub.sgx.com/FileOpen/Group%20Restructuring.ashx?App=Announcement& FileID=449569   Unsecured bonds due for maturity: NCLSP 5.000% 28Aug2017 - S$90mio (trading at appx 60% below par) NCLSP 6.500% 23Jul2018 - S$75mio (trading at appx 70% below par) NCLSP 5.050% 26Aug2019 - S$200mio (trading at appx 75% below par)   Current Market Cap - appx S$40mio MarcPh      ( Date: 14-Apr-2017 21:18) Posted: High Risk Offshore & Marine Companies - Nam Cheong Limited About $365mio of bonds issued in three tranches, trading at 60-80% discount to par. Strongly peddled by OCBC Private Banking two years ago (before oil weakness) in aftermarket trading due to expectations of over 50 vessels due for delivery in 2017/18.   Auditors cast going concern doubts on Nam Cheong http://www.seatrade-maritime.com/news/asia/auditors-cast-doubt-on-nam-cheong-s-going-concern.html

 

Falcon seeks to extend maturity of 5.5% notes by another 3 years.

http://www.businesstimes.com.sg/companies-markets/falcon-energy-seeks-extension-for-s50m-notes-due-september

MarcPh      ( Date: 11-Jul-2017 10:55) Posted: Second informal meeting with bondholders tomorrow for Falcon Energy. No significan sign of distress from BSM quotes prices at 97-98 area https://www.bondsupermart.com/main/bond-info/bond-factsheet/SG6SJ3000005

 

Pros:

• Rare High yield perpetual Bond + high self-imposed step-up penalty at Year 7
• Extremely low current-debts
• Change-of-Control clause for major reputable shareholders
• Possibility of offloading properties to their REITs for capital renewal if cashflow is tight.

Cons:

• Perpetual Bond - no guaranteed redemption but with step-up coupon on Year 7 to hint about redemption.
• Should not be perceived as a REITs. This company runs REITS and property-related Private Equity Funds.
• Low current debts but just delisted and not regulated by REITs framework (debt-level might implode at shareholder' s discretion)

Good Review:
https://www.bondsupermart.com/main/article/ARA-Asset-Management-Ltd-Upcoming-SGD-Perpetual-438

 

 

SUPER HOT CAKE!!! Better than Netlink Trust!

Issuer: ARA Asset Management Ltd
Issuer/Bond Rating: Unrated
Currency: SGD
Rank:  Subordinated Perpetual Securities
Tenor: Perpetual, callable in 5yrs
Coupon: Indicative 5.5% area (expect final coupon 5- 5.2% area)
Coupon Stepup and reset: 300bps step-up & reset from year 7
Denomination: SGD250K
Use of Proceeds: General corporate purposes, refinance existing borrowings, financing investments, working capital
Change of Control: Issuer call at Par if John Lim, The Straits Trading Company Ltd, Cheung Kong Property Ltd. Warburg Pincus and/or Avic Trust cease to own in aggregate 30% shareholding interest of the Issuer
Dividend Pusher and Stopper: Yes
Listing/Clearing: SGX-ST/CDP
Lead Managers & Bookrunners: OCBC, DBS, UOB

 

 

Second informal meeting with bondholders tomorrow for Falcon Energy.

No significan sign of distress from BSM quotes prices at 97-98 area
https://www.bondsupermart.com/main/bond-info/bond-factsheet/SG6SJ3000005

 

They priced $300mio of perp bonds at 5.5% - very reasonable, just short of COC (important)
The announcement title on SGX mentioned it as USD, but actually it is SGX

You are also correct about some investors spooked by the recent decision by Noble (exited agri business) to default on their perp bond coupons.
It could be the first SGD perp bond coupon default after Swiber n Ezra.

 

Given that Olam 2019 5.8% trading at yield of 3.6%, this is indeed very generous.   I suspect that they are forced to offer a higher yield because of sector risks caused by Noble.

The proceed will be used to redeem the 7% perp, I guess.

 

Thanks for confirming.
This hints that the issuer cannot get Temasek confirm the continuity of 50% holding in Olam in the long run.

Pricing terms are still fair but it could be the most attractive perp bond issued in 2017 if the COC clause was included.

ShowMeMoneyp      ( Date: 03-Jul-2017 14:47) Posted: Unfortunately, no COC clause

 

Unfortunately, no COC clause

 

Good morning Sir,

Yes, Jurong Shipyard (under Sembcorp) is also a problem kid but so long they are GIC or Temasek owned, they are fine.
This is also applicable for Olam so i feel that this perp bond is perfect if there' s a COC (Change of Control) clause.
 

john_ric      ( Date: 03-Jul-2017 10:33) Posted: olam was once a problem kid. dont know steady or not?

 

olam was once a problem kid. dont know steady or not?

 

Very Sexciting NC5 perp issue from Olam at indicative 5.75% + cummulative + reasonable coupon reset/step up at year 5,
except Change of Control (Important)

Change of Control (COC) is important because Olam needs our sovereign wealth fund' s majority ownership to enjoy long-term low cost of financing.

• 5Y SOR is below 3% now so expect some leveraged positions.
• Remember NOL? NOL bonds without COC clause, crashed by 20-30% when news broke out that it will be owned by the French instead of Temasek.

Please clarity me if there' s COC clause cos i am not in Singapore at this momenet.