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Thread: BOND THREAD

  1. #11
    Join Date
    Nov 2008
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    Why die? What is the worst case senario? NAV drop? So NAV drop, bank ask for top up? Or bond kaput?

    Did you get your answer? I ask because this is open ended.

    During 2009, my notes which I purchased before that performed well. I sold because it was safer to maintain cash. I also converted my smart mortgage to loan.

    Quote Originally Posted by focus


    These are my bonds but leverage under 5%..

    Dare not leverage.. but if dare leverage.. i think i huat big big.

    But just to share.. I've attended a recent pte bank presentation on how to leverage on bonds..
    and I asked 2 questions :-

    1) When i asked the speaker about leverage 50-80%(as shown in his examples) and if 2009 happens again, what will happen? 2 oldies in the audience sniggered and says "sure die one"... and the speaker was non-commital and says it's better to be conservative.
    2) when i asked the speaker about the leverage % as conservative, he says 20%.

    So food for thought. Financial instruments really cannot leverage too much. For properties, its' as long as you service your installments, no one will bother you..

  2. #12

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    Quote Originally Posted by radha08
    hang around a bit longer u will know who are the clowns i am one of them......u might also bump into one or two gays......some nice sisters......some story tellers......the list goes on..enjoy ur stay...
    Thanks for the warm welcome!

    Quote Originally Posted by buttercarp
    @leftfield
    The only bond I know is James Bond .

    I also wanted to post a picture of James Bond, but as bro radha said cannot joke one.
    Scared get scolding from TS .
    Haha, I newbie so can get away from nonsense for a start.

    Oops, realised that there is indeed a very serious discussion going on, I shall make myself scarce! Apologies for the OT!
    树大必有枯枝,人多必有白痴。
    树无皮必死无疑,人不要脸天下无敌!

  3. #13
    Join Date
    Jun 2008
    Posts
    1,569

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    Quote Originally Posted by Laguna
    Ooops
    min $3,250,000 is your worth
    lol.. that's the bonds only in the portfolio mah and you can assumed it's all 250k each. but it can be more or less. But definitely more than $3.25mil. I think we already talked about it. So you just keep to yourself Don't reveal loh.

  4. #14
    Join Date
    Jun 2008
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    1,569

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    Quote Originally Posted by chestnut
    Why die? What is the worst case senario? NAV drop? So NAV drop, bank ask for top up? Or bond kaput?

    Did you get your answer? I ask because this is open ended.

    During 2009, my notes which I purchased before that performed well. I sold because it was safer to maintain cash. I also converted my smart mortgage to loan.
    hmm.. i think 2009, got people who have their term facility recalled and need to top up. During 2009, I attended a mtg, a old man complained to the speakers that they promised them the sky and now he lose money and that is his retirement money.. As usual , speakers just assured him it's temporary and must hold for long term view.. But sometimes, retirement money is very hard to use long term to justify. But a lot of bankers always tell you think long term. Nobody talk about cashflow.

    Ok, bad to worse case :-
    1) Interest rate rise and your spread is narrowed which means you are receiving less than planned cashflow. Interest rate rise also caused the value of your bonds to go down and if you sell, it will be at a loss. So you can only hold onto the bonds till maturity. If say you get a 5yr bond at 5% yield and on the 3rd yr, the interst rise to 3%, you spread narrow to 2%. If you have depended on that calaculation to live off your passive income, you might have to recalculate and sell some bonds to cover your expenses(assuming again if you have only 3yrs living expenses covered from start of yr 0).

    2) If crisis do happen again and Capland convertible was a perfect example, you lent at 50% LTV for the bonds at par but crisis, capland could be had for 60% par, and bank also want you to top up. You have to sell your bonds if you have no money to top up. That was the panic. No panic, bank also will not ask for top up ah. But properties, they dare not touch.. too illiquid to ask you to sell and pay them back.

    3) Your bonds is one of those highly levered companies paying above market yield. It goes kaput or maybe restructuring which may be write off part or total value of the bonds, or offered a lower yielding bond in exchange for the higher yielding bond. Your loan interest is still there and your lower value yield ..again.. compromise your cashflow.

    Anyway, i am speaking from a point of retiree needing cashflow. If you are working and playing for capital gains.. totally different..

    I am a noob too.. and too conservative.. So, i would love to learn more about bonds leverage form those more experienced like yourself Do share more.

  5. #15
    Join Date
    Aug 2009
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    3,620

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    Quote Originally Posted by focus
    lol.. that's the bonds only in the portfolio mah and you can assumed it's all 250k each. but it can be more or less. But definitely more than $3.25mil. I think we already talked about it. So you just keep to yourself Don't reveal loh.
    yaya. promised promised..u also don't talk about me!!! deal done...

    I see that ur preserving your wealth very well, getting a rate of about 1-3% above inflation.

    From an another angle, ur not growing your wealthy that greatly if u did not use leverage to your advantage, be it in property or bond etc.

    A prudent investor is to take calculated risk and is not NOT to take risk.

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