BOND THREAD

[cbsh38584]

Min bond size as a rule of thumb...shall not be less than $500m

Thank.
So far I hv Petra food (5%) & banyan Tree 6.25%. LTV 60%) with a small size issued bond. I am lucky that my banker is able get a special waiver for my Petra food bond with LTV. If not, I got to top up or sell at least 1 to 2 of my profitable bond holdings.

Banyan Tree (6.25%) is another small iussed bond with illquid trading price. Sometime, there is no seller/buyer price. To sell right now is 102.8 due to good mkt condition. If crisis come, sell price maybe below 100.

I just need till end of Dec13 to fulfill close to my goal set out to earn from bond from 2011 to 2014. One year earlier tgt (Dec 2013) due to most of the bond price has rised above my coupon payout per year. Now I dont feel comfortable holding many bonds till 2014.

I feel very very uneasy with all the printing of money.Our governemnt is so determine to stabilise the property price with all the CM. Even to buy car, U need to pay 40% cash downpayment. I feel that the government is seeing a big storm in 1-3 yrs time. I hope it will not be a much bigger one than the 08/09.



I did accumulator on Citigroup in Jul 2011 for almost a year. I ride through the up & down (as low as US$25) Accumulate @US$35.3 . After one year of accumulating citigroup share , I got a total 6500 shares (US$232k). I manage to sell @US$38 with a profit of only US$17500 last year. If I sell now @US$46. I will be earning US$70k. This what I call emotional trading behaviour. We will probably sell at a less profitable price. OLD habit die hard. But now, I make less mistakes now on trading stock since 09.

I also hv done twice on capitaland accumulator (S$500k) in 2011. I accumulated the capland ave [email protected] for 3 mths. 1s batch sold @ 2.88. 2nd batch @3.03. Again, emotiomal waekness trading behaviour.

That is why I prefer bond in 2011 as it is get rid 80% of my emotional trading weakness in stock. But bond in 2014 maybe risky with leveraging. Investing is getting more & more complex . Too many noise from financial newspaper, media (CNBC/bloomberg) , investment seminar, unpreditable politician words from their mouth etc that it confuse me.

Buying bond need less monioring with less volality. It allow me to hv more time to spend with my kids & travel for short oversea holiday.


rdgs,
Vic

[chiaberry]

The most wanted stock : samsung, but listed in Korea, so most likely will go in heavy into First State Dividend Advantage, with 5.1% in 0001.hk and 4.1% in Samsung and LTV of 4 times.

Will be selling more bonds next week

Already went into this one. And one of the US mid-cap companies funds.

[Laguna]

Already went into this one. And one of the US mid-cap companies funds.

Which is the US mid cap fund?

[phantom_opera]

10y TST yield is playing catching up with Dow ... if Dow @ 15k, 10y TST probably at 2.2% and 5y TST at 1% with SG 5y yield at 0.5%

[chiaberry]

Which is the US mid cap fund?

Whoops my bad....it's a small cap fund. To my mind, it's a mid cap bec the market caps are at least 1 bill USD but they are still considered as small cap in the US market.

I have not enough spare time to search and monitor individual US stocks so took the "easy" way out.

http://funds.ft.com/uk/Tearsheet/Sum...00B19Z4B17:USD

You can negotiate with your banker on the sales charge, I think.

You may be able to get some ideas from their holdings if your target is US small caps.

[cbsh38584]

Fixed coupon Note (FCN) - Alternative investment idea for INCOME
==========================================
FCN is designed for investors who
have a 4 months positive view on ALL shares or individual share in the basket & prepared to directly hold the worst performing.

Expect all the shares or individual share in the Basket will continue to trade within a predetermined range of parameters. i.e expect the closing prices not to appreciate nor depreciate by more than the difference bewteen the knock in price & the early redemption barrier prices during the life of the security



Example FCN on Apple - Min to launch is US$500k
==================================
Normally share with other clients or get friends to combine

Let say Apple spot or initial price is US$430

Your Strike price = 90% of your inital price of $430 = $389

Your barrier price = 100% of your inital price of $430 = $430

Your knock in price = 75% of your inital price of $430 = $322


Knock in event is deemed to hv occurred (FCN turn "live") if the staggers closes below the knock in price ($322) on ANY DAY from & including the trade date to & including final valuation date (final observation date).



EARLY REDEMPTION EVENT is deemed to hv occurred on OBSERVATION date (MONTHLY) when it close at $430 (barrier price on any of the observation date). The early redemption date can happen on the 1st (pirce must be @ $430) or 2nd (price must be @$430) or 3rd (price must be @430) etc observation date (go by monthly)

4 months FCN observation date
====================
1st Onservation date 25th Apr13
2nd observation date 25th May13
3rd Observation date 25th Jun13
Final observation date 25th Jul13


If no early redemption event (price still below $430 ) has occurred & if , in respect of the stagger. Two likely sernario will occur.


a. If knock in event has not occurred (price >$322 & <$430) . You will rec'd back your initail capital (US$500k) plus your monthly coupon pay to you on each observation date.

b. If knock in even has occurred (price touches $322). Final observation date of Apple price close @ let say $300. Your US$500k will convert into share @ your strike price of $392 (NOT $300). Your inital paper loss will be $(392-300) 25%. You just need to hold on to your Apple share till it goes above US$392.



I hv done alot of FCN or ELN since 2011. It has been a good income for me. There is only 1 trade lost money due to the natural disaster. Japan Earthquake in 2011. Mit UFJ financial group (8306) JPY$12m yen ELN. My ELN mature on Fri. But the Earthquake happened on Thurs. I know my this ELN is gone. I later cut loss at a huge loss S$23k a few months later. Today Mit UFJ (price now JPY 535) is above my buy price of JPY455 in 2011. Nett I still make some money.

Today, I hv 5 FCN contract (each US$100k) giving me US$5k/mth coupon. I only do FCN on the stock that I monitor & feel comfortable with the price. Usually do when the RED CHIP or US$ blue chip price has dropped alot. Min HK stock is HK$600k. USD stock is $100k. I seldom do SGX stock as the VIX is low & yield (coupon) not attractive enough at deep strike.


By sharing, I am also learning. This is just FYI. A alternative investment idea for income. Pls refer to your banker for more detail. I am thinking of switching to E-trade to save cost. But if I am not active doing trade at the bank, my borrowing cost USD/SGD may not be a PREFERR RATE.



rdgs,
Vic

[focus]

Instead of a FCN, why not just buy an ETF and take a 4month view.

[cbsh38584]

Instead of a FCN, why not just buy an ETF and take a 4month view.

ETF is more for capital again. I will only buy stock or ETF when there is FEAR.
I dont trust Goldman sach analyst. They are one of the invited guess to this world biggest manipulator organisation, BILDERBERG in stock,currency,
commodities etc etc. I even dont trust my banker recommendation.


"Goldman’s O’Neill says stocks around the world are still cheap"
I only trust "mkt FEAR INDEX" or my own fear mind. It is this fear index that enable me to buy bond and stock at good price in 2011. Due to my emotional trading behaviour, I soldl away my cheap stock too early. But at least I made money. It is bond that help me to make alot of money.

FCN is mostly for income. I will do FCN or ELN when I find that the chances of my capital converting to share is less than 30% & just rec COUPON 10% to 15% depending on the VIX . High VIX/low strike mean higher yield given 15%. Lower VIX/low strike price mean lower yield 9%. I did ELN bank of China in 2011. My capital of HK$600k was converted to Bank of China share @3.47 . I hold for a year & collect the dividend payout of >5%. Then I sell away @ 3.62. But it goes up as high as HK$3.90. Now it is HK$3.67.
.
Another Eample I did bank of america in Jan 2013. My strike price for BAC is US$9.30. So the chance for BAC to go to 9.30 between Feb to May13 is low. So I just rec US$833 (sgf$1k) per month. BAC price is now US$12.

rdgs,
Vic

[stl67]

Vic,
What do u think of ELN on Freeport mcmoran? This counter is safe? How about Rio Tinto? Bond price are too high to mask now, so am looking at alternative.

[cbsh38584]

Vic,
What do u think of ELN on Freeport mcmoran? This counter is safe? How about Rio Tinto? Bond price are too high to mask now, so am looking at alternative.

FCN is a better choice for income with deeper strike price. But not easy to get clients to do together. ELN can be done alone. But the strike price & yield is lousy. There is a risk that your inital capital may convert to share. So do FCN on quality stock.


3 month USD FCN with KI on Rio Tinto + BHP on Aug12 from std chart.
Rio Tinto price was USD$50 & BHP USD$68 in Aug12.

Currency USD
Coupon 12%
K.O 98% (Knock out - 98% of $50/$68)
Put strike 87% (your strike price 87% of $50/$68)
K.I 80% (Trigger "live" @ 80% of $50/$68)



Pls check with your banker & advise you on this 2 stocks. The price now for Rio Tinto is US$51 & BHP is US$62.6 . Get him to price for you. If U are comfortable with the above K.O , Put strike & K.I. Then go ahead. If U dont feel comfortable. Then pls dont do.

FCX. NO COMMENT.

PLs do keep record of your investment in spreadsheet. Review every few month to see what is the right & wrong investment U hv done.

rdgs,
Vic

[starrynight]

Laguna,

Mapletree trading 1.08 already

good money... will sell next week at 1.08, hard to clear 1.10

I spent the last two hours searching from HK to US.
short listed

1299.hk
0001.hk
0941.hk

US : alamah, forgot to write down.

The most wanted stock : samsung, but listed in Korea, so most likely will go in heavy into First State Dividend Advantage, with 5.1% in 0001.hk and 4.1% in Samsung and LTV of 4 times.

Will be selling more bonds next week

[Laguna]

Thanks Vic for the in depth sharing. In fact, among all threads, I find this is one of the better ones with no non-sense around.

I gave up as a trader, as I am rather emotional and felt stress whenever I am in position, be it in my favour or at disadvantage.

In fact, I planned to hold my bonds till 2Q2014, but, after reviewing, decided to liquidate 2/3 of the bond and move into equities. The main reasons are : data from US, US$ and the TA of the various major equity markets.

I studied ELN and find that the deal is not so attractive in general.
Still searching for buy.....

[starrynight]

Today's bond launch:

Issuer:
GE Capital Australia Funding Pty Ltd.
Guarantor:
General Electric Capital Corp. ("GECC")
Type:
Senior, unsecured
Ratings:
Moody's A1 / S&P AA+ (Stable/Stable)
Size:
AUD 200,000,000 minimum
Maturity date:
March 20th, 2017 (4 years)
Payment date:
March 20th, 2013
Coupon:
[4.250]% area Annual Act/Act
Initial Guidance:
AUD S/Q Swap +87.5a (y=[4.30-4.35]%)
Format:
Reg S / Registered / London listing
Denomination:
AUD 50k* x 1k
Clearing:
Euroclear / Clearstream
Leads:
HSBC/TD (pot)
Passporting:
Belgium, Ireland , Germany , Luxembourg , the Netherlands , Ireland , Spain and UK
Expected Timing:
As early as today
Product Risk Rating:
P2

*AUD50k if Accredited Investor (AI), otherwise, A$200k.

[starrynight]

China Minzhong Food Corp is planning a US dollar-denominated bond as Asia-Pacific note sales reach a five-week high. Debt risk in Australia and Japan declined to the lowest since 2011. The vegetable processor based in the south-eastern province of Fujian hired JPMorgan Chase & Co and Deutsche Bank AG for fixed-income investor meetings from March 11, according to a person familiar with the deal. Moody's Investors Service rated the proposed note in the US currency at Ba3 (BT)

[cbsh38584]

Today's bond launch:

Issuer:
GE Capital Australia Funding Pty Ltd.
Guarantor:
General Electric Capital Corp. ("GECC")
Type:
Senior, unsecured
Ratings:
Moody's A1 / S&P AA+ (Stable/Stable)
Size:
AUD 200,000,000 minimum
Maturity date:
March 20th, 2017 (4 years)
Payment date:
March 20th, 2013
Coupon:
[4.250]% area Annual Act/Act
Initial Guidance:
AUD S/Q Swap +87.5a (y=[4.30-4.35]%)
Format:
Reg S / Registered / London listing
Denomination:
AUD 50k* x 1k
Clearing:
Euroclear / Clearstream
Leads:
HSBC/TD (pot)
Passporting:
Belgium, Ireland , Germany , Luxembourg , the Netherlands , Ireland , Spain and UK
Expected Timing:
As early as today
Product Risk Rating:
P2

*AUD50k if Accredited Investor (AI), otherwise, A$200k.

RBS denominated in AUS$ bond. Coupon 13%. Bond price now 120. So yield to maturity is like 5 to 6%. Anybody who is a high risk taker & are going to hold for 1 year. Actually can buy if the price volality is low which mean it did move up/down by only 1-2%. At least 8 to 10% gain & sell at 117/118 after a year holding period.

It is the same for Central China real estate SGD bond 10.75%. Price now is 110. If the price movement is only 1-2% within a year. Can consider buying at 111 & hold one year to collect 10.75% coupon. Sell it at 107/108 after holding for a year. So est gain is 6-8%.Capland is one of the majority investors for Central china real estate.

This is just for sharing some investment idea. Make sure the bid/offer spread is not too wide. Pls check with your banker for advise.

rdgs,
Vic

[cbsh38584]

Thanks Vic for the in depth sharing. In fact, among all threads, I find this is one of the better ones with no non-sense around.

I gave up as a trader, as I am rather emotional and felt stress whenever I am in position, be it in my favour or at disadvantage.

In fact, I planned to hold my bonds till 2Q2014, but, after reviewing, decided to liquidate 2/3 of the bond and move into equities. The main reasons are : data from US, US$ and the TA of the various major equity markets.

I studied ELN and find that the deal is not so attractive in general.
Still searching for buy.....

ELN is not attractive enough for investors. But if U will to do it at E-trade online. The premium paid is at least 15% better than doing at Bank. Furthermore the trade date is immediate. As for bank, it trade date is delay by 2 wks.

FCN is more for income for me. But the min amt to start is US$500k to US$750k for US stock. HK FCN is HK$5m. So must find clients or friends to combine.

By looking at FCN or ELN discount price. Sometimes, U can tell that speculators are shorting this particular stock. Just give U a true cases.

FCN pricing on Apple on Oct12.
Spot US$640.
Knock level is 100% = US$640
Strike level is 90% = US$576.
Barrier level is 72% = US$448

If U know at the barrier level of 72% for Apple is very deep. There is a high chance for APPLE to drop from US$640 onward. Smart investors will start using CFD to short APPLE stock on the same day when this FCN is launched. But U must not be greedy. GREED will kill U sooner or later. I did not do this FCN. But many ignorant clients invested in this FCN as the CNBC media paint a SKY high tgt of US$700 to US$800. They are stucked at US$567. Price is now US$431.A 25% dropped. So I say I dont trust all Banker recommendation & CNBC invited stock guru. I will do FCN on the stock & price I monitor & feel comfortable with it.

This is why I keep ask for my banker to email all the list of HK/USD ELN everyday. FCN needs to call. I want to learn E-trade platform ELN. I want to know more by going into detail. But I need longer time as I hv kids to take care.



rdgs,
Vic

[chiaberry]

I find that I can stomach the risk of straight equities better than these sophisticated instruments. Bear in mind that the risk is not small if you end up getting the stock (and large $ amounts of it at that). Rio Tinto and other mining shares can be quite volatile and personally I would not be able to stomach ending up with a large tranche of Rio Tinto or BHP shares in my portfolio.

[Laguna]

Ooops, just came back, realised Mapletree was trading 1.08.

Thanks Vic, have a lot to learn from you.

I was thinking of picking up some good US counters, like Cat, in view of the recovery. But all the good counters, are of very high PE and EPS....

still searching......wait for the pull back in Dow first

[cbsh38584]

Ooops, just came back, realised Mapletree was trading 1.08.

Thanks Vic, have a lot to learn from you.

I was thinking of picking up some good US counters, like Cat, in view of the recovery. But all the good counters, are of very high PE and EPS....

still searching......wait for the pull back in Dow first

How to buy when the the VIX is below 13. This no fear in the market at all.
Since most good counters are of very high P.E. Instead of waiting for it to correct.

Can look into FCN like Apple or China mobile/China telcom just to earn some income. Different people got different risk. My friend dont do at all.

I do ELN/FCN becasue I want to learn how this product work. I slowly start to observe that in a bullish stock & when the bank recommend FCN with deep barrier like 72% to 62%. That is the counter to short.


Another example Barrick gold (ABX)& Freeport Mcmoran (FCX) 5th Nov12.
Price for ABX is US$36 & FCX is US$39.9 on 5th Nov12.

The bank launch a FCN on ABX + FCX on 5th Nov12.
Strike 95%
Barrier 62% (ABX=22.3) & FCX (24.2).

If U look at the deep barrier of 62%. Both stocks maybe a favourite counter to short on 5th Nov12. Today, ABX is 28.91 (20% drop) & FCX is $33.28 (16% drop).

I am afraid of another natural disaster. if big earthquake strike let say @USA, LA. I think my FCN is gone. For stock, U can immediately cut loss. Not for FCN.

I hv a tgt to meet every year. So I will invest base on my goal tgt. Not to exceed my goal way too high by leveraging more. Too risky.

rdgs,
Vic

[Laguna]

I hv a tgt to meet every year. So I will invest base on my goal tgt. Not to exceed my goal way too high by leveraging more. Too risky.

rdgs,
Vic

Hi Vic, is your target % return on cash on cash basic? inclusive of dividend and capital appreciation?

[stl67]

Hi Vic,
In this case FCN on ABX & FCX could be a good chance to go in since they are already down. %up is more than %down.

Coincidentally, my banker is talking to me on US commoditiies counter when you post the message.

[Laguna]

Hi Vic,
In this case FCN on ABX & FCX could be a good chance to go in since they are already down. %up is more than %down.

Coincidentally, my banker is talking to me on US commoditiies counter when you post the message.

Hi stl67
look like you are moving faster than me.....
which banker?

[stl67]

FCN is a better choice for income with deeper strike price. But not easy to get clients to do together. ELN can be done alone. But the strike price & yield is lousy. There is a risk that your inital capital may convert to share. So do FCN on quality stock.


3 month USD FCN with KI on Rio Tinto + BHP on Aug12 from std chart.
Rio Tinto price was USD$50 & BHP USD$68 in Aug12.

Currency USD
Coupon 12%
K.O 98% (Knock out - 98% of $50/$68)
Put strike 87% (your strike price 87% of $50/$68)
K.I 80% (Trigger "live" @ 80% of $50/$68)



Pls check with your banker & advise you on this 2 stocks. The price now for Rio Tinto is US$51 & BHP is US$62.6 . Get him to price for you. If U are comfortable with the above K.O , Put strike & K.I. Then go ahead. If U dont feel comfortable. Then pls dont do.

FCX. NO COMMENT.

PLs do keep record of your investment in spreadsheet. Review every few month to see what is the right & wrong investment U hv done.

rdgs,
Vic

Hi Vic,
Can PM me your RM contact? Apparently my UBS banker is unable to match. Your PM full liao.

Thanks vm.

[amk]

just wanted to comment something.... I'm in the business of derivatives.. all derivatives are sold with a margin to the bank, there is no free lunch. I knew some people, highly intelligent and successful ppl (who are in this trade themselves), betting on structured products and losing a lot on it. Over the years I have come to the conclusion that this kind of products are best used as a hedge of your positions, not a position itself.

so proceed with extreme caution... make sure you understand every possible KO/KI clause and willing to take it...

[stl67]

Hi stl67
look like you are moving faster than me.....
which banker?

UBS and Std Chartered. I always want to do bond, but the price is a bit high now. So i was thinking of doing something short term and wait for opportunity later.

Meanwhile, collect coupon and also can learn to track the counter/products. Have to be honest that I am relying on the bankers. That is why I prefer to have 2 bankers so that I can check on each other view. One way to learn for newbirds like me.

[chiaberry]

just wanted to comment something.... I'm in the business of derivatives.. all derivatives are sold with a margin to the bank, there is no free lunch. I knew some people, highly intelligent and successful ppl (who are in this trade themselves), betting on structured products and losing a lot on it. Over the years I have come to the conclusion that this kind of products are best used as a hedge of your positions, not a position itself.

so proceed with extreme caution... make sure you understand every possible KO/KI clause and willing to take it...

Agree with this. My partner formerly worked for the management consultancy arm of one of the big accountancy firms in the UK and one of his assignments was in structured derivatives. We wouldn't personally touch them as personal investments.

[Laguna]

Hi Vic,
Can PM me your RM contact? Apparently my UBS banker is unable to match. Your PM full liao.

Thanks vm.

vic,
still using Credit Sue?
their pricing not so attractive
what is the pricing you got?

[stl67]

just wanted to comment something.... I'm in the business of derivatives.. all derivatives are sold with a margin to the bank, there is no free lunch. I knew some people, highly intelligent and successful ppl (who are in this trade themselves), betting on structured products and losing a lot on it. Over the years I have come to the conclusion that this kind of products are best used as a hedge of your positions, not a position itself.

so proceed with extreme caution... make sure you understand every possible KO/KI clause and willing to take it...

as always, thanks for the post.

for me i thought about what to do for a long time (my 2x leverage funds take at least 3-4 mths to come and finally came 2 wks ago).

I like bonds, but the price is a bit on the high side and worst if interest rate starts to rise, we will be holding on to this baby for a long time (bond price drops).
So I decided to take a smaller positiion in Bonds.

My bankers asked me to buy the various funds like Schroders, Fullerton, Templeton, Pimco. My question is: what is the yield? About 5%. Some can generate quite high yield but i think is those risky type. So not so attractive but I will buy a bit to have a balance portfolio. The other thing I dont like funds is the mgt fees and etc.

Stock is equally risky.

What I like about ELN is that I am collecting some coupon and most important it is short term. I can rebalance my portfolio when there are opportunities.
In the event I got converted to the physical shares, it is still not the end of the world as I can collect dividend or sell it off when the shares rebound. So like what Vic does, the counter must be reasonably sound cannot be something like CAO.

Not sure if my strategy makes sense as i am still learning from the folks here.

For me propteries very hard to invest liao...

[amk]

just my opinion: all these notes are by and large some forms of calls/puts. the yield you get is basically the premium you sold. say 12% yield 1 month, you really sell a 1 month put charging 1% premium. if you use this as a hedge, than it does not really matter if you only use it to protect your existing position. if you use it to acquire exposure, then the risk you take is not worth, you might as well acquire exposure directly. for high yields you need volatile stock, but for volatile stock the movement over 1 month can be easily much higher than the annualized yield. (for example, ELN at 98% 1 month, the stock itself easily fluctuates > 2% at this period). ultimately there is no bargain in this. every option has a fair value. retail investors will never get the fair value of an option. you will always overpay it. the only true "fair value" you can get is the underlying itself, i.e. stocks/bonds/etc.

[cbsh38584]

just my opinion: all these notes are by and large some forms of calls/puts. the yield you get is basically the premium you sold. say 12% yield 1 month, you really sell a 1 month put charging 1% premium. if you use this as a hedge, than it does not really matter if you only use it to protect your existing position. if you use it to acquire exposure, then the risk you take is not worth, you might as well acquire exposure directly. for high yields you need volatile stock, but for volatile stock the movement over 1 month can be easily much higher than the annualized yield. (for example, ELN at 98% 1 month, the stock itself easily fluctuates > 2% at this period). ultimately there is no bargain in this. every option has a fair value. retail investors will never get the fair value of an option. you will always overpay it. the only true &quot;fair value&quot; you can get is the underlying itself, i.e. stocks/bonds/etc.

Thank for your input.I am doing more for income. Do not hv the intention to collect the stock unless it really get converted into share . For me, I cannot dont trade & still get preferred borrowing cost rate @1.06%. So I need to do some trades. Buying stock direct is a better choice. But the past 3-4 years is a nightmare for most investors. There is still some fear in buying stocks direct. Some prefer to do ELN to get a lower buy price if it get strike. Mentally they feel good getting a discount and at the same time get coupon payout. But in actual fact, buying direct maybe a better choice for some investors.ELN/FCN is better to do at E-trade. Just like FX is better to do at Saxo rather than through bank. Your FX (DCI/PCI) trade with banks will be outsource to Saxo etc. So bank is just a middleman.ELN/FCN at E-TRADE. Premium paid is 15% better than bank.More choices of stock with very min amt. Bank min US$50 to 100k for ELN/FCN. Trade date is the next day for E-trade. Bank is 2 week later. E-trade platform allow U to cut loss anytime from your FCN/ELN. May even make some profit if U decide to redeem earlier from your ELN/FCN. As for bank, U need to hold till maturity. No way to redeem early.rdgs,Vic