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Thread: BOND THREAD

  1. #2581
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    Yes, you are right! CCR private properties had already crashed 30%, what more do you want when OCR private properties has not dropped? we would need to see OCR private property prices drop 30% or more from their THOUSAND YEARS HISTORICAL PEAK before there is any more drop in CCR private property prices!

    But my life and investment don't only revolve around properties and their prices, and my liquid assets (money not in properties) are earning much better profits from other investment avenues!

    People should just go to sleep for next 5 years about property prices (because OCR prices likely drop >30% and CCR will not go anywhere)!

    Quote Originally Posted by Kelonguni View Post
    Yah already depreciated 20-30%, quite impossible to depreciate further.

  2. #2582
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    For the past few months . Most of the bond price is really selling at a premium. Even the new Wing Tai SGD perp bond is price at 4.08% with
    a bond feature of deferral interest payment. FYI, One of the Wing Wai straight bond SGD 4% which is due 2021. Now trading 103+.
    Have been trying to buy short dated bond like Banyan tree , Centurion & other. But no seller or price too high & therefore too Xpensive to buy
    Regret did not outright to buy seagate 5.875% long dated bond when it was @92. Now trading at 100.

    Just only recently, I saw a opportunity to buy Wanda 4.875% USD bond due Nov 2018 @100. It was > 102+ before the speculation that banks were issuing notices that they will sell Wanda bonds. It went as low as 98+ before it recovered to 100. Since it is a short dated bond (Nov 2018). I decided to take the risk to buy.

    Now monitoring at GLP 3.875% USD bond due 2025. Trading @ 95+. It was 102+ before GIC decide to sell away GLP.

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    Thank you. Pls share more.

  4. #2584
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    GLP 3.875% USD bond due 2025 (or 8 years later) at price of 95 or YTM of 4.5% is pretty expensive even for an investment grade bond............


    Quote Originally Posted by cbsh38584 View Post
    For the past few months . Most of the bond price is really selling at a premium. Even the new Wing Tai SGD perp bond is price at 4.08% with
    a bond feature of deferral interest payment. FYI, One of the Wing Wai straight bond SGD 4% which is due 2021. Now trading 103+.
    Have been trying to buy short dated bond like Banyan tree , Centurion & other. But no seller or price too high & therefore too Xpensive to buy
    Regret did not outright to buy seagate 5.875% long dated bond when it was @92. Now trading at 100.

    Just only recently, I saw a opportunity to buy Wanda 4.875% USD bond due Nov 2018 @100. It was > 102+ before the speculation that banks were issuing notices that they will sell Wanda bonds. It went as low as 98+ before it recovered to 100. Since it is a short dated bond (Nov 2018). I decided to take the risk to buy.

    Now monitoring at GLP 3.875% USD bond due 2025. Trading @ 95+. It was 102+ before GIC decide to sell away GLP.

  5. #2585
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    Recently, strangely bond prices are creeping up............. It seems people are shifting money into buying bonds!

    Quote Originally Posted by teddybear View Post
    GLP 3.875% USD bond due 2025 (or 8 years later) at price of 95 or YTM of 4.5% is pretty expensive even for an investment grade bond............

  6. #2586
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    Because nothing much to invest. Property got ABSD, Equities also cheong liao.

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    Quote Originally Posted by stl67 View Post
    Because nothing much to invest. Property got ABSD, Equities also cheong liao.
    district 29 not many know

  8. #2588
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    2017 is also quite good year for me as a bond investor . Bank Coco perp bond was the very big surprise. It rally almost by 8% since last yr.

    My two lots ($500k) NOL 5.9% which is due Nov 2019 bond was called on 8th Dec17. The early redemption Price was @102.2.
    Immediately, I switched to a higher risk junk bond PIL 7.25% due Dec18. Hope every will be fine. There is a forecast of 4 US rate
    hike for 2018 which may affect the bond price.

  9. #2589
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    2017 was a very surprise for bond investors especially bank Coco bond that give a decent return of >8%+. A good return of $197k.
    2018 could be the end of the bull run for bond investors who are leveraging. The borrowing cost for USD was as low as 0.9% & SGD 1.12% in 2010. Coming 2018, the borrowing cost should be >2.5% for both USD & SGD. Simply too risky to leverage. Need to find a alternative income .

    If you will to invest into unit trust since 2016. Most of the unit trust return should be >20%.
    But for those invested in equity, the return varies from low of 1% to high of >30%. Investors invested into yesteryear stocks like SPH , Telco, Singpost etc. The return can be negative. Bank stocks has a fantastic return of >30%. Reit >15%.

  10. #2590
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    US banks stocks had a great run! So are material stocks (like Vale, up >200%)!
    2018 will be a great year for US stocks with Trump's corporate tax cuts!

    Quote Originally Posted by cbsh38584 View Post
    2017 was a very surprise for bond investors especially bank Coco bond that give a decent return of >8%+. A good return of $197k.
    2018 could be the end of the bull run for bond investors who are leveraging. The borrowing cost for USD was as low as 0.9% & SGD 1.12% in 2010. Coming 2018, the borrowing cost should be >2.5% for both USD & SGD. Simply too risky to leverage. Need to find a alternative income .

    If you will to invest into unit trust since 2016. Most of the unit trust return should be >20%.
    But for those invested in equity, the return varies from low of 1% to high of >30%. Investors invested into yesteryear stocks like SPH , Telco, Singpost etc. The return can be negative. Bank stocks has a fantastic return of >30%. Reit >15%.

  11. #2591
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    Wow, like that property is it going to crash next or Bullllllllll.

  12. #2592
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    Quote Originally Posted by Arcachon View Post
    Wow, like that property is it going to crash next or Bullllllllll.
    The housing mortgage loan borrowing rate is quite different from Bond borrowing rate.
    My mortgage loan rate is 1% (next yr 1.4%) while my bond SG borrowing rate is 2.15% .
    USD is 2.25% (2017).

    As long as property investors with a stable job are not over leverage on the ppty with some buffer cash to cater for any unforseen circumstance like job loss, major illness etc. They should be ok. Marginal ppty investors should stay out from huge investment such as ppty which must have long term holding power.

  13. #2593
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    Quote Originally Posted by cbsh38584 View Post
    The housing mortgage loan borrowing rate is quite different from Bond borrowing rate.
    My mortgage loan rate is 1% (next yr 1.4%) while my bond SG borrowing rate is 2.15% .
    USD is 2.25% (2017).

    As long as property investors with a stable job are not over leverage on the ppty with some buffer cash to cater for any unforseen circumstance like job loss, major illness etc. They should be ok. Marginal ppty investors should stay out from huge investment such as ppty which must have long term holding power.
    I was having my lunch when I overheard a group of unlces (age 65 to 75) talking about old condo. One more experience uncle
    said that never in his 30 yrs as a ppty investor the old condos were enbloc at such a large scale at such a short period of time.
    The govt only just give a warning of potential ppty investor not to over leverage. This is a move by the govt to create continous economy growth till 2020 to 2021 to be ready for the next election & hopefully PAP has a good election result by then. Most of the old condo which got the potential to be enboc. The price has moved up by > 20% since 2016.


    Experience uncle said
    ==============
    Old condo mandrain garden at east coast was selling @ $1.4m in 2016. It was transacted @ $1.7m in 2017. He said Laguna park should be successfully enbloc by this year. Netpune court will take about 3 yrs to get it enbloc. There are 9 potential old condo to be enbloc in east coast area. He rest assured his friend that his leasehold ppty (cant rent out) which he intended to sell at $1.2m (bought @$1.1m+) should not be a problem in the next coming 6-12 mths.


    I went twice to Ocean park condo (2000pfs @$2.1m to $2.2m) to view with my friend. I tell him just buy & keep it as he got tons of cash avail but did not buy as he is not prepared to pay extra ABSD 7%. I told to my wife about buying Ocean park condo but she is totally not interested at all as it is too old & ugly. Now there is no seller at all.

    My other friend was hestiating in offering (@$1.8m to $1.9m) the very run down old condo around Thomson area just early 2017. He regetted as the owner now asking price is $2.5m to $2.6m. His younger brother has a high paid job (for 20 yrs) & still single (40+). I whatapp him a few D15 ppty to buy in the last few years.Still does not want to buy a private ppty to invest or stay. He even went to view the Rivergate (selling @ 1400psf) with my friend during the 2009 crisis. He did not buy. Now living with his father in a 3rm HDB flat.


    My lady friend bought 2 units at laguna park (ave $1.3m+) just a few year back as there is a high potential enbloc. One of the unit is under her old father name (escape the 7% ABSD) which she paid in full cash. It was rented out .She will likely to make >$2m if it get enbloc. Again my wife is totally not interested at all.


    I have applied for the Chip eng seng bond IPO (4.75% due 2020 & 4.9% due 2022) but did not get it. I will buy if it drop close to 100.


  14. #2594
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    Vic,
    you are already so good in bond and other financial instruments investment. dont come and invest in properties lar.. give people like us a chance lar.. LOL.

  15. #2595
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    Appreciate any comment on Hyflux 6% CPS# and Hyflux 6% PerCapSec#. Can buy? If yes, which is better?

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    It is very interesting to revisit this thread and see how is the situation today vs what was mentioned months back.
    Hyflux, enbloc etc have come and gone.
    Did not hear from Vic for quite sometime, perhaps, can Vic share some insight please

  17. #2597
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    Yes, would be great to hear from Vic.

    Wing Tai, etc. bonds being touted by at least 1 platform.

    Quote Originally Posted by Laguna View Post
    It is very interesting to revisit this thread and see how is the situation today vs what was mentioned months back.
    Hyflux, enbloc etc have come and gone.
    Did not hear from Vic for quite sometime, perhaps, can Vic share some insight please

  18. #2598
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    DBS is launching UBS Asian Bond Series 2 – Floating Rate Class.
    Quarterly payouts 3m libor + ( around 1.3 to 1.45%) all in indicative est ( 3.63 to 3.78%)
    Very Special loan spread 0.25 % +3m libor
    LTV 85%
    Tenor - 4.3 years
    Risk level 3 (highest is 5)

    Let say u invested 500k & borrow 500k.
    Yearly nett coupon after minus borrowing cost est - 1.1% x 500k = US$5.5k/yr without any $ cash layout.


    The fund collected will invest into Asian investment grade & junk bond (around 70 of the bond) which has dropped quite a lot. So no concentration risk on single bond. Name like Evergrande , state bank of india , korea national oil , pertmina Persero , Guangzhou R&F etc are some of the name they will buy.

    The investments are not guaranteed in capital and the loss is limited to amount invested. Clients are exposed to the risk of default of the underlying issuers and leverage may magnify any potential loss.


    I bought a similar fund at CS two years ago. I told profit less than a year without any early redemption penalty.
    DBS is quite aggressive in pushing this fund but I am not interested. Any "carrot" or "incentive" to lure clients
    to buy is something I will not be interested.

  19. #2599
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    [QUOTE=cbsh38584;536513]DBS is launching UBS Asian Bond Series 2 – Floating Rate Class.
    Quarterly payouts 3m libor + ( around 1.3 to 1.45%) all in indicative est ( 3.63 to 3.78%)
    Very Special loan spread 0.25 % +3m libor
    LTV 85%
    Tenor - 4.3 years
    Risk level 3 (highest is 5)

    Let say u invested 500k & borrow 500k.
    Yearly nett coupon after minus borrowing cost est - 1.1% x 500k = US$5.5k/yr without any $ cash layout.


    The fund collected will invest into Asian investment grade & junk bond (around 70 of the bond) which has dropped quite a lot. So no concentration risk on single bond. Name like Evergrande , state bank of india , korea national oil , pertmina Persero , Guangzhou R&F etc are some of the name they will buy.

    The investments are not guaranteed in capital and the loss is limited to amount invested. Clients are exposed to the risk of default of the underlying issuers and leverage may magnify any potential loss.


    I bought a similar fund at CS two years ago. I told profit less than a year without any early redemption penalty.
    DBS is quite aggressive in pushing this fund but I am not interested. Any "carrot" or "incentive" to lure clients
    to buy is something I will not be interested.


    FYI, the USD borrowing cost has gone up by 300% from 0.96% (July12) to 3% (Jul18). SGD loan from 1.1% to 2%.
    It will probably increase further by next year. So no more leveraging for USD & SGD bond.

    I am a high risk taker. I do have a few sleepless nite when I buy high yield junk bond. I do cut loss (15%-30%) if needed.

    By early 2019, most of my bond holding will be matured. I really do not know what will happen next year will play out as the 2 big power trade war has started.Better play safe by keeping more cash for 2019. USA has given Asia 40 over yrs of prosperity. It is currently over now with Trump. USA first. No free trade.Only fair trade (reciprocal).

  20. #2600
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    for me
    1. Avoid all bonds marketed by DBS
    2. Even UBS did not sell me this floater.
    lolx

  21. #2601
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    Quote Originally Posted by Laguna View Post
    for me
    1. Avoid all bonds marketed by DBS
    2. Even UBS did not sell me this floater.
    lolx
    Do not buy anything from any financial institution in Singapore. I did so and have lost a lot of money. I have never made one penny investing in stocks or bonds, or mutual funds. Real estate is how I made a bit of money.

  22. #2602
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    I got offered this one too... basically suggested to me to put up USD150k in cash and borrow USD840k

    Quote Originally Posted by cbsh38584 View Post
    DBS is launching UBS Asian Bond Series 2 – Floating Rate Class.
    Quarterly payouts 3m libor + ( around 1.3 to 1.45%) all in indicative est ( 3.63 to 3.78%)
    Very Special loan spread 0.25 % +3m libor
    LTV 85%
    Tenor - 4.3 years
    Risk level 3 (highest is 5)

    Let say u invested 500k & borrow 500k.
    Yearly nett coupon after minus borrowing cost est - 1.1% x 500k = US$5.5k/yr without any $ cash layout.


    The fund collected will invest into Asian investment grade & junk bond (around 70 of the bond) which has dropped quite a lot. So no concentration risk on single bond. Name like Evergrande , state bank of india , korea national oil , pertmina Persero , Guangzhou R&F etc are some of the name they will buy.

    The investments are not guaranteed in capital and the loss is limited to amount invested. Clients are exposed to the risk of default of the underlying issuers and leverage may magnify any potential loss.


    I bought a similar fund at CS two years ago. I told profit less than a year without any early redemption penalty.
    DBS is quite aggressive in pushing this fund but I am not interested. Any "carrot" or "incentive" to lure clients
    to buy is something I will not be interested.

  23. #2603
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    Since there is a early redemption penalty of 1% in the 1st 3 year. It make it even not attractive.

    The recent (2 days ago) issued PUB bond 3.01% 15 yrs (due 2033) tenor an alternative to fixed deposit
    for those very low risk taker.

    PUB bond 3.620% due 12th Oct2027 (SGD) is trading above par (107).

  24. #2604
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    https://www.theedgesingapore.com/sin...3ca48-90699429

    Reflects my own sentiments as well. Definitely seeing a flight to quality

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    For those holding CES bonds, the money comes back today if you put your bonds!

    Talk in the mkt that UOL may be issuing new bond soon.

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    Quote Originally Posted by starrynight View Post
    For those holding CES bonds, the money comes back today if you put your bonds!

    Talk in the mkt that UOL may be issuing new bond soon.

    I bought CES one lot at 98 just a few mths ago. I cancel another one lot due to miss communication on my banker side.
    The bank sold & absorbed the 2k+ loss.

    Bought 500k of PIL due Nov 2018 at 100.2 early last yr. Thinking of switching to PIL 8.5% due on Nov 20. But no seller at the moment. Pacific intl line.

  28. #2608
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    A bond is a debt security and is a form of borrowing. Governments and companies issue bonds to raise funds from investors willing to lend them money for a period of time. Investors, including retail investors, buy bonds to earn interest during the life of the bond. Bonds can form part of investors’ investment portfolios.

    Risk of investing in Bonds
    * Credit Risk * Interest rate risk * Liquidity risk * FX risk
    Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised
    Moody investment grade rating
    Aaa , Aa1 , Aa2 , Aa3 , A1 , A2 , A3 , Baa1 , Baa2 , Baa3
    Moddy Non-investment grade
    Ba1 Ba2 Na3 B1 B2 B3 Caa1 Caa2 Caa3 D
     
    S&P and Fitch investment grade rating
    AAA AA+ AA AA- A+ A- BBB+ BBB BBB-
    S&P and Fitch Non investment grading Rating
    BB+ BB BB- B+ B B- CCC+ CCC CCC- D
     
    Interest rate risk affects the value of bonds more directly than stocks, and it is a major risk to all bondholders. As interest rates rise, bond prices fall and vice versa. The rationale is that as interest rates increase, the opportunity cost of holding a bond decreases since investors are able to realize greater yields by switching to other investments that reflect the higher interest rate. For example, a 5% bond is worth more if interest rates decrease since the bondholder receives a fixed rate of return relative to the market, which is offering a lower rate of return as a result of the decrease in rates
    Liquidity Risk
    In an Liquid market, investors run the risk of either having to retain the bond till maturity or selling it before maturity at an unfavorable price
    Issue size = liquidity ? (>US$500m more liquid ?)
    Establishing a fair price & price comaprisons can be difficult or impossible as there are sometimes no Counterparties interested in the bond.

    FX risk
    Morgan Stanley 7.625% Aust dollar bond Due 2016
    Aud/SGD 1.33 (1st Feb12)
    Aud SGD 1.254(1st Jun12)
    Aud/SGD 1.285(12th Dec12)
    If U borrow (due to low rate 1.55%) SGD or USD to convert to Aust to buy Aust bond. There is a FX risk which may go against you

    Bond Types
    Fixed Rate bond (straight bond)
    Fixed maturity & fixed cash flow pattern (I.ecoupon)
    Eg NOL 4.25% due 2017
    Olam 4.07% due Feb 2013

    Callable bond
    Gives the issues the right to buy back all or some of the issues prior to maturity
    Call price : Specified price at which the bond may be repaid
    Eg Hyflux 4.25% 2018. (Callable on 7 Sep15 @ 102.13)

    Perpertual bond (some do come with callable term)
    Bond in which the issuer does not repay the principal. Rather, a perpetual bond pays the bondholder a fixed coupon as long as he/she holds it. Prices for perpetual bonds vary widely according to long-term interest rates. When interest rates rise, perpetual bonds fall and vice versa.
     
     
    Inflating-linked bond
    Pays a fixed coupon + an amt that is linked to a price index to compensate for inflation
    * S’pore’s central bank is studying the feasibility of selling
    Inflation-linked bonds to help citizens boost on savings amid low interest rate ( Bloomberg 9th Jul 2012)

    Convertible bond
    * Hybrid that combines both equity & debt features
    * Holders have the right to convert the bond into issers’s equity in a predominated ratio during a specified conversion period
    Eg Keppel land 1.875% due 2015 convertible bond
    Conversion price @ $6.72. ( Now trading @3.8)

     
    Bond structure
    Unsecured Bond that is not secured by a collateral.Most bond are unsecured
    Secured Bond.
    Bond is backed by a Collateral
    Eg OUE 3.36% due 2013.
    Back by Mandarin gallery & Mandarine Orchard.
     
     
    Bond seniority
    bondholders are credits & therefore have a higher priority calim than equity holders in a liqudation or restructuring scenario.
    Senior bond has a higher priority claim than other bonds on the assets issued by the same entity.

    Subordinated (junior) bond A class of bond that, in the event of liquidation, is prioritized lower than other classes of bonds. For example, a subordinate bond may be an unsecured bond, which has no collateral. Should the issuer be liquidated, all secured bonds and similar debts must be repaid before the subordinated bond is repaid. A subordinate bond carries higher risk, but also pays higher returns than other classes



    NikkoAM SGD ETF retail bond. IPO@$1. Est coupon 3.2% to 3.3%.

    Top holding. LTA , HDB , PUB etc.

    Low risk. Use SRS acct to buy & keep for long term.

  29. #2609
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    Thanks Vic
    very good summary.

  30. #2610
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    There are now many many indicators pointing to the same direction of market likely to be in the near future.

    Expect many companies to miss their estimates and trim their forecasts in this coming quarter.

    Just be extremely cautious in your investment. At time, zero holding is better than invested.

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