TRAFIGURA SGD PERP bond priced at a fixed rate of 7.5 is very attractive to me.
As I do not want to increase my bond holding. So I decide to sell away hyflux 5.75% Perp bond @ 100.25 & switch out to a higher coupon TRAFIGURA SGD 7.5% PERP bond (issued 2 weeks ago) @100.05.
TRAFIGURA USD PERP bond priced at a fixed rate of 7.625%, was met with very strong interest last year, Apr 2013. Price to buy is @102 now for USD perp bond. So I think the TRAFIGURA SGD perp may have some room to go up beyond 100. Do not intend to hold long term. Once my tgt is met, I will sell it .
USD interest loan rate came down a bit from 1.05% to 0.998%. SGD interest loan rate is @ 1.06%.
Also apply S$20k for the retail capitalmall trust bond 3.08%. Only got S$11k. Price to sell from SGX screen is $1.008. No custodian fee for retail bond.
rdgs,
Vic
this is my favorite thread.
thanks vic for the constant updating.
after capital mall trust bond 3.08%, may i know what's the next?
Posting in next few posts some recent bond issuances:
ISSUER: Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited
ISSUE: RMB-denominated Senior Unsecured Notes
FORMAT: Regulation S Registered
RATING: Unrated
ISSUE SIZE: TBD
TENOR: 3 years
Initial Price Guidance: 11.5% area
CHANGE OF CONTROL PUT: Noteholders put at 101% upon occurrence of a Change of Control
FINANCIAL COVENANTS: Tangible net worth, gearing and interest cover
financial covenants
DENOMS: RMB1,000,000 x RMB10,000
CLEARING: Euroclear / Clearstream
LISTING: The Stock Exchange of Hong Kong Limited
GOVERNING LAW: English Law
USE OF PROCEEDS: Repay and/or refinance the existing indebtedness of the Group and for general corporate purposes
SOLE BOOKRUNNER DBS Bank Ltd.
AND LEAD MANAGER:
TIMING: As early as today
Risk Rating: 4N
LV: TBC
ISSUER Starhill Global REIT MTN Pte. Ltd.
GUARANTOR HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Starhill Global Real Estate Investment Trust)
STATUS Direct, unconditional, unsubordinated and unsecured Notes
EXPECTED ISSUE RATING BBB+ (S&P)
ISSUE SIZE TBD
DISTRIBUTION As per Information Memorandum dated 9 June 2010 (as supplemented by the Supplemental IM dated 17 February 2014), including the Singapore selling restrictions under Sections 274/275 of the Singapore Securities and Futures Act
FORMAT/DOCS Bearer / Issuer’s SGD 2 billion Multicurrency Medium Term Note Programme
TENOR 7-Year
INTEREST PAYMENT Semi-annual, actual/365 (fixed)
Price Guidance: 3.5% area
DENOMINATION SGD250K
GOVERNING LAW Singapore Law
LISTING SGX-ST
CLEARING CDP
SELLING RESTRICTIONS Sections 274 and/or 275 of the Singapore SFA
JOINT LEAD MANAGERS AND BOOKRUNNERS ANZ and OCBC Bank (B&D)
TIMING As early as today’s business
Risk Rating 4N
LV Indicative 65%
ISSUER: Wing Tai Holdings Limited
FORMAT: S274 & 275 and Reg S Bearer, Fixed Rate Notes
STRUCTURE: Fixed Rate Senior Unsecured Notes
FORMAT: Regulation S, off the Issuer’s MTN programme
RATING: Unrated
ISSUE SIZE: TBD
TENOR: 10 Years
PAYMENT: Semi-annual, actual/365 (fixed)
Price Guidance: 4.85% area
DENOM: SGD250k
DETAILS: Singapore Law/SGX-ST
CLEARING: CDP
SELLING RESTRICTIONS: As per IM, S274 & S275 of Singapore SFA SOLE LEAD MANAGER & BOOKRUNNER: DBS
TIMING: As early as today's business
Risk Rating: 4N
Issuer: Indian Railway Finance Corporation Limited
Issuer Rating: Baa3/BBB-/BBB- (Moody’s/S&P/Fitch)
Expected Issue Rating: Baa3/BBB-/BBB- (Moody’s/S&P/Fitch)
Status: Fixed Rate, Senior Unsecured
Format: Reg S only, Registered
Tenor: 5 YR
Expected Size: US$ Benchmark
Guidance: CT+265bps area (~4.1% area)
Event of Default: If Government of India ceases to own, directly or indirectly, more than 51% of voting securities of IRFC
Terms: SGX listing, US$200k/1k denoms, English law
Joint Bookrunners: ANZ, Barclays, Deutsche Bank and The Royal Bank of Scotland
Timing: Today's business
Risk Rating: 3
Indic LV: 70%
ISSUER: NWD (MTN) Limited
GUARANTOR: New World Development Company Limited
ISSUER RATINGS: Unrated
TYPE: Senior Unsecured Bonds
FORMAT: Reg S Registered off MTN Programme
ISSUER SIZE: US$ Benchmark
TENOR: 7-Year
Price Guidance: 7yr UST + 340bps à Indic 5.52%
USE OF PROCEEDS: General Corporate Purposes
DETAILS: HKSE listing, US$200k/1k Denoms, English Law
JOINT GLOBAL COORDINATORS: HSBC (B&D), JP Morgan, UBS
JOINT BOOKRUNNERS: HSBC, JP Morgan, UBS, CLSA (a CITIC Securities Co.)
Issuer: Intesa Sanpaolo Bank Ireland P.L.C.
Guarantor: Intesa Sanpaolo S.p.A.
Expected Issue Ratings: Baa2 / BBB / BBB+ / AL (M/S&P/F/DBRS)
Status: Senior Unsecured, Unsubordinated,Reg S Registered Notes
Expected Size: CNH Benchmark
Settlement: 27-Feb-14
Maturity: 27-Feb-19
Coupon: Fixed, semi-annual ACT/365
PRICE GUIDANCE: 4.5% area
Listing/Denoms: Luxembourg Stock Exchange / CNY1000k+10k
Docs/Law: Issuer’s EMTN Programme / English
Joint Leads: Banca IMI / HSBC (B&D) / SinoPac
Timing: Today's business
Risk Rating: 3N
LV: Indic 70%
Coupon rate not stated
+++
Issuer: China CITIC Bank Corporation Limited
Issuer Ratings: Baa2 stable / BBB stable (Moody's/Fitch)
Issue Ratings: Unrated
Format: RegS Registered
Ranking: Senior Unsecured
Issue Size: CNH Benchmark
Tenor: 3y
Details: CNY1,000,000 x CNY10,000 denoms, SEHK, Hong Kong Law
Clearing: CMU with linkage to Euroclear and Clearstream Joint Global Coordinators: HSBC, BBVA
Joint Bookrunners: HSBC, BBVA, CITIC Securities Intl
Joint Lead Managers: HSBC, BBVA, CITIC Securities Intl, China CITIC Bank
Intl, Mizuho Securities
Risk Rating: 3N
LV: Indic 70%
Issuer: China Resources Land Limited
Issuer Ratings: Baa1 stable (Moody’s) / BBB+ stable (Fitch)
Expected Issue Ratings: Baa1 (Moody’s) / BBB+ (Fitch)
Format: Reg S Registered off MTN Programme
Status: Fixed Rate, Senior Unsecured
Issue Size: US$ Benchmark
Tenor: 5 year | 10 year
Guidance:
5-year à T+300bps area (Indic 4.48%)
10-year à T+340bps area (Indic 6.11%)
Details: SEHK Listing, 200k/1k denoms, English Law
Sole Global Coordinator: HSBC
Joint Bookrunners: ABC International, Bank of America Merrill Lynch, DBS Bank Ltd., HSBC, J.P. Morgan, UBS
Expected Timing: As early as today
Risk Rating: 5yr – 3N | 10yr – 4N
LV: 5yr – 70% | 10yr – 65%
Profile:
CR Land is one of the leading property development and investment companies in the PRC. Listed on the Hong Kong Stock Exchange in 1996, its shares have been a constituent of the Hang Seng Index since March 2010. As of 12 February 2014, CR Land had a market capitalisation of HK$111.7 billion. Its main sources of revenues include the development and sale of residential properties, rental income from operating investment properties and the provision of value-added services in the PRC.
As of 18 August 2013, CR Land had development properties in 45 cities and investment properties in 31 cities in the PRC. CR Land have made significant investments in, and have interests in property development projects in, first tier cities in the PRC, such as Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, where the property market has experienced growth in recent years. CR Land have also engaged in a number of projects in second-tier and third-tier cities such as Shenyang, Hefei, Chengdu and Chongqing. Its strategic focus in the future will be on growth opportunities in first- and major second-tier cities.
Issuer: BP Capital Markets p.l.c.
Guarantor: BP p.l.c.
Issuer Ratings: A2 (stable) / A (positive)
Expected Issue Ratings: A2 (stable) / A (positive)
Type: Fixed Rate Senior Unsecured
Tenor: 5 year
Deal size: CNH Benchmark
PRICE GUIDANCE:
3.875% area
Books
Over 1bio
Expected Issue Size
CNH 1bio (Will not grow)
Settlement: T+4
Trade Date: 24-Feb-2014
Settlement Date: 28-Feb-2014
Maturity date: 28-Feb-2019
Clearing: Euroclear and Clearstream
Denoms: CNH1,000,000 x CNH10,000
Format: Reg S
Details: EMTN / London Listing / English Law
Use of Proceeds: General Corporate Purposes
Bookrunners: ANZ, BNP Paribas, Mizuho Securities, Standard Chartered Bank (B&D)
Risk Rating: 2N
LV: 75%
Coupon not stated
+++
ISSUER: Bank of China Limited, Singapore Branch
ISSUER RATINGS: A1 Stable / A Stable / A Stable (Moody’s / S&P/ Fitch)
EXPECTED ISSUE RATINGS: A1 / A (Moody’s / Fitch)
STATUS: Fixed rate, senior unsecured
DOCUMENTATION: Drawdown off the USD10 billion MTN programme of Bank of China Limited
FORMAT: Reg S, Registered Form
SIZE: CNH Benchmark
TENOR: 2 Years | 5 Years
USE OF PROCEEDS: General Corporate Purposes
DETAILS: SGX Listing, CNY1,000,000 x CNY10,000 denoms, English Law, Euroclear/Clearstream
JOINT BOOKRUNNERS: Bank of China, DBS Bank Ltd., OCBC Bank, Standard Chartered Bank
CO-MANAGER: Agricultural Bank of China Limited, Singapore Branch
Expected Timing: As early as today
Risk Rating: 2N
LV 2yr - 80% | 5yr - 75%
Hi Vic,
May I know which bank is offering SGD 1.06% borrowing rate and the rolling tenor? I have some Trafigura perp with CS with financing at 1.56%-1.57xx% on monthly roll basis. Is there some strategy to nego on these rates as I was being told that they are pricing it on Sibor + 1.2% spread.
U are over-paying with CS, if I might be blunt... the good news is probably cause they think you are very rich, which is a good "problem" to have
I'm not a private banking customer, but my banker can offer me 1-year fixed lending against my bonds for leverage purposes at 1.21% fixed. 1- / 3-month interest rates are lower than that. Mine's on cost-of-funds + margin basis.
Today's issuance:
*** NEW ISSUE: PING AN 5.5-Year SGD ***
Issuer: Value Success International Limited.
Guarantor: China Ping An Insurance Overseas (Holdings) Limited.
Keepwell Provider: Ping An Insurance (Group) Company of China, Ltd.
Status: Senior, unsecured
Issue Rating: Unrated
Issue Size: TBD
Format/Docs: Reg S / Section 274 and 275 of SFA (Singapore) /registered / Issuer’s USD 2 billion MTN Programme
Price Guidance: 4.375% Area
Tenor: 5.5-Year
Denomination: SGD250K
Governing Law: English Law
Listing: SGX-ST
Clearing: Euroclear
COMPARABLES
Vanke SGD 3.275% 2017 100.05 3.26%
Henderson Land SGD 4% 2018 103.55 3.15%
Tradehaven's commentary below. Apparently final application book topped $2.2b
+++
If the question “Why Are They Issuing In SGD For Their First non CNH Issue ?” did not cross your mind, I suggest you call your banker up and ask “What happened to all those Tata bonds issued last year ?” (which you obviously have not bought or you would have asked the aforementioned question)
This is the imaginary conversation I am dreaming up between banker and client.
Client : Why is Ping An issuing in SGD dollars ?
Banker : For working capital etc etc etc
Client : Why is the issue not rated ?
Banker : Ping An Insurance Group Co China Ltd, the keepwell provider is rated AAA by Dagong Global Credit. China Ping An Insurance Overseas (Holdings) Limited, the parent of Value Success International is similarly unrated. Another subsidiary of the ultimate parent, Ping An Property & Casualty Insurance is rated A (-ve outlook) by the S&P.
Client : Why should I buy this bond ?
Banker : Ping An sees an opportunity in raising money in Singapore and Singaporeans are savvy bond investors. This is a rare opportunity to buy at such a good yield. There is a great deal of demand especially from Chinese investors to put their money into SGD.
Client : That is what you said about Tata bonds last year.
Banker : Aha…. That is a different story ……..blah blah blah…
Ping An is one of the gems of the SHCOMP with a 1.2% weightage (9th highest) on the index, much like Tata weighs heavy in India.
Lets see where the Tata bonds are in SGD (Tata International has not price so I left it out).
Tata Motors TML Holdings 4.25% 05/2018 96.75/97.75 cts
Tata Communications 4.25% 02/2016 99.50/100.25 cts
Tata Steel ABJA Investment Co 4.95% 05/2023 88/89 cts
To be caustic, Ping An is here because Singapore is sufficiently illiquid and can be trusted not to sell off too much besides the fact that Singaporeans are known for their generosity.
Having said that, the pricing is fair compared to their CNH issuance levels which means they could have exhausted their CNH fund pool (after raising CNY 1.6 bio so far this year) and have ventured farther afield for funds. And I can make an educated guess that the probability of a Ping An bailout if ever, would be far higher than the probability of a Tata bailout.
Comparing the price of 4.375% to the other investment grade Chinese name in SGD bond space, Vanke of Bestgain Real Estate 3.275% 11/2017 which is going at around 100, this bond looks attractive. Cenchi, Shuion and United Envirotech are not really comparable.
Risks :
The structure is complicated. Issuer is SPV, guaranteed by China Ping An Insurance Overseas which has a keepwell agreement with Ping An Insurance Group.
Group assets have grown 4x in 5 years to Dec 2012 vs China Life 2x in 5 years.
Needless to say capitalisation is weak and assets quality is a big unknown since disclosure is scanty.
Note that a keepwell agreement is a common and legally weak form of guarantee that chinese companies use for their offshore deals that falls far short of an explicit guarantee. But it is universally accepted so far.
No, I should not be thinking about Tata bonds but I just cannot help it. Books are now well in excess of SGD 300 mio by now.
If U are a new investor that just join in PB. Pls do not trust or NEVER NEVER the bank recommendation. U need to have a alternative input from other sources. Some PB will not hesitate to let U leverage more. Sometimes, we are too greedy on the high yield side that we have forgotten about the high risk that come with it.
Need to do a quarterly "housekeeping" on our investment portfolio to ensure NO over borrowing & whether there is a need to rebalance our portfolio to reduce the risk.
I am not a bond investor.
About Ping An, what I want to say is that it is too big to fall in China. Therefore, I think it is quite safe.
As far as why it will issue a bond in SG, the reason I can think of is that the cost will be much higher if it issues a bond in China. In SG, a good choice for curency is S$.
Part of it is due to bond capital gain which I have sold off & switch out to another bond. My bond holding was est >S$3m in early 2013. I sold off to take profit for some of the bond in Feb13 to Apr13 to reduce to S$3m. It has been S$3m till now.
I am more of a risk taker. I buy China developer junk bond @ 100 or below 100. Yield around 6.5% to 11%. It can drop >20% during crisis & recover back when everything stabilise . China developer name like evergrande CNY (7.5% -sold off @101) , Shui On SGD (8% - sold off @104) , Central China real estate SGD (10.75% - will take profit soon @108) , Kiase USD (8.8%) etc etc etc. Ave LTV 55%. I will reduce my exposure to China real esate bond in the near future. Don't intend to keep till maturity. Too risky. Singapore good companies corporate bonds are not volatile. More stable.
I do check those unit trust that offer high yield Asian bond fund & will look for their top holding. Then I will get my banker (at least 2) for their view. This is one of the way I pick the bond to buy.
Take note that some insurance companies do carry the above mention junk bond. But the % I believe is small.
This bond forum http://tradehaven.net/ is very informative. We can learn from him more.
Just FYI. From SG market talk forum.
Need to be extra careful in high yield Perp bond. Will probably sell once it hit my tgt.
Trafigura Beheer issued a SGD and USD bonds in excess of 7% yields in Singapore. Marke- insiders told me that they were used by evil bankers to repackaged into financial products and offloaded to high networth clients.
Using $250K, a client can own $1m of Trafigura Beheer's bonds:
Cost of Capital: $250K x 0%
Cost of financing bankloan: $750k x 2% = $15000 (actually appx 1.8%pa)
Bond Coupon Income = $1000K x 7.5% = $75000
Nett Returns = $75K - $15K = $50K
Using $250K, the client makes 50K a year, so effectively he thinks that his "Return on Capital" is 20%. Fantastic right? (as good as my friend) Imagine, if the client goes for 10x gearing, his Return on Capital will be 57%pa.
In both real-life examples, the investors are taking too much underlying risks. This is not the way we should live our life:
Property: loss of rental income, drop in property value, surge in SIBOR rates
Bond: Default risk, drop in bond prices, surge in SIBOR rates
After screwing us with minibonds (repackaged financial products), Accumulators (i-kill-u-later options contracts), our brilliant RMs continue to engineer more financial products with maximum leverage to sustain their business volume.
Bond investment should be kept simple.
Thanks for the input on borrowing rates. Sibor did creep up in the recent 3-6mths, but nonetheless had my suspects that I might be overpaying at 1.56/57% pricing on one monthly rollovers. I will contemplate to fund up all the leveraged positions if it comes to a non-negeotiable standoff when I ask for a more reasonable rate in the near future with 1.40% as ceiling expectations.
On the part of of Trafigura, I recall reading (either here or Tradehaven) that the LTV is offered at 60% at CS but non at other PB outlets nor retails. Some was saying this is in part due to the fact that CS was one of the 4 bookrunners. I did not verify whether any gearing was offered elsewhere, but can confirm that it is indeed 60% at CS. It's interesting to hear about the possibility of 300% LTV where 250k position is offered 750k financing, but concurrently also alarming that it's happening to this name which I like pretty much.
I am pretty risk adverse, I won't normally consider perps given a rising yield environment, and I won't touch CNY/CNH denoms, or China incorporates. But for Trafi, what sold me was the issuer itself, the yield sounded fair despite that it had to be a perp. But looking at it the other way when considering the firm isn't listed, the only way into gaining exposure would be through its debt issue. Comparatively, if Olam was offering identical terms on a perp, I wouldn't subscribe, and telling me Temasek or the likes is in bed with them won't make me sleep any easier. Only downside thus far is perhaps the 50 cents rebate on Trafi, and the less FMCG type brand name that probably contributes to its pricing being kept under par.
Happy Weekend guys!
I told my friend that CS gives a very high LTV as compare to other PB. Especially those small issue size SG corporate bond like Lippomall , Banyan Tree , Petra food , OUE etc.
The SGD financing cost for him is 1.35% as a new acct. Pls take note that they like to give investors full maximum leverage.
In 2006/07, I did a lot of Accumulators (i-kill-u-later options contracts). It is easy money to earn at that time. I have US$6 million plus contract at that time . It is almost > 300% over leverage. So they don't care about the investor taking extreme high risk with MAX leveraging. I manage to survive (cut loss fast) & learn from the worst experience in my life. My RM has set a goal for herself to hit $1m commission at that time. She was asked to leave the bank in 2008 (sack ?).
Interesting to c u do a switch to this Tr bond after placement .... this has been traded below par since issue, did u get a gd price ? Banks sure like you as you trades often, even on bonds. In/out already earn the bid/offer spread. U trade bond like trading stocks, not the average bond investors we know many bonds we hold till maturity /called ...
There is a bull for fixed income from 2011 to early Apr 2013. During this period, it is easy to make $$$ from capital gain ( 3% to 6%) plus coupon after holding for a few mths.
After May13, no more huge capital gain. Maybe the most is 1%+ for good quality name. Those Perp bond & junk bond went below par. Some more than 10%.
My RM is kind enough to take only one commission (0.20) when I sold Hyflux & bought Trafigura on the same day. Sold [email protected]. Bought [email protected]. My profit for hyfux is S$1420 holding less than a mth.