BOND THREAD

[starrynight]

From Zerohedge:

When we started discussing the upcoming onslaught of corporate defaults in "Minsky Moment" China, now that the bankruptcy seal has been broken, we warned that the worst is about to come.

Well, it's coming.
Overnight, Hong Kong's The Standard reported that in addition to the solar, coal and real-estate developer companies that are on everyone's radar as potential future bankruptcy candidates, one can also add steel makers to the list, with its report that Highsee Group, the largest private steel makers in Shanxi province has defaulted on CNY3 billion of debt, unable to repay its bonds on time.

According to The Standard, "Highsee Group's 3 billion yuan debt was overdue last week," the 21st Century Business Herald reported yesterday. "The company is running in red, and has failed to pay workers for months. Many of its furnaces have stopped operating."
The reason for this most recent collapse: the plunge of domestic steel prices , which have fallen to their lowest level in more than eight years in mid-March as a result of weak demand and a surge in output.
Earlier, Shanxi coal miner Liansheng Resources Group went bankrupt while its loans, which were packaged into a wealth management product distributed by China Construction Bank (0939), are likely to be bailed out. UBS Securities securities analyst Chen Li said it is the peak season for corporate debt dues. Up to 80 percent of the nation's trusts have obligations to meet within the second quarter, he added.
IBT adds that "Highsee Iron and Steel Group ... is just one of numerous steel mills facing issues in the country. Data from the National Bureau of Statistics revealed that China produced 2.22 million tonnes of crude steel a day over the first two months of 2014, Reuters reports. This record amount was manufactured even though demand wasn’t as strong."
It remains to be seen if Highsee is bailed out, however now that pretty much any corporation with exposure to the commodity and real estate space that has maturing debt is on the rocks, the PBOC may be better suited just to let the system cleanse itself, even if that means the collapse in both the Chinese stock market, which unlike the US is largely irrelevant (especially since it once again dropped below 2000 while the Hang Seng entered a bear market), but the bigger issue is that the Chinese housing bubble is set to burst both domestically and abroad, as we reported yesterday.
And lest readers are left with the impression that merely operational companies with direct exposure to the deleveraging carnage that is taking place in China - at least until such time as China unleashes another multi-trillion stimulus - are exposed, also overnight financial firm Southchina Futures announced it is terminating it business on "major operation risks."
From the company's website:

About South China Futures Brokerage Co. closure announcement

As the Company has significant business risks, some of the bank account was frozen Guizhou Court of Justice, in order to protect the legitimate rights and interests of investors, the company passed a resolution to stop the shareholders' meeting brokerage business futures, now specific announcement is as follows:

First, the announcement issued by the date, the South China Futures Brokerage Co., Ltd. (hereinafter referred to as "the South China Futures") is no longer accepting new customers open positions instructions.

Second, within five working days of the date of this announcement, make customers to handle the South China Futures cancellation procedures.

Third, the five working days after the publication of the notice, did not apply for cancellation procedures futures customer account funds will be transferred to the unified Huatai Great Wall Futures Co., Ltd. (hereinafter referred to as "Huatai Great Wall Futures").

Fourth, since the date of this announcement within ten working days from customers willing to open an account at Huatai Great Wall Futures, futures and South China Huatai Great Wall Futures will jointly provide customers with convenient handle channel, during the South China Huatai Great Wall Futures futures and customer acceptance , Tel: South Futures, (020) 38791617 ; Huatai Great Wall Futures, 4006280888.

Notice is hereby given.

Dropping like flies now.
We wonder how long until the US stock market, floating in its cloud of manipulated, centrally-planned oblivious innocence, realizes that a China on the verge of all out deflationary recession is not a good thing?

[cbsh38584]

From Zerohedge:

CNH was 6.05 two mths ago. Thinking of buying CNH (offshore RMB) around 6.30 (now 6.22.).

[starrynight]

Some issuances this past week:

Vallianz:

Initial Yield guidance at cost: 7.5%
Books: Books open, deal is strongly anchored.
Expected Issue Size: TBD
Denomination: SGD 250k x 250k
Timing: Today’s business
Comments: No Recommendation
Risk Rating: 5N
LV: 60%

Yield finally fixed at 7.2%

[starrynight]

CCB Asia:

Initial Yield guidance at cost: T3+175 Area à Indicative 2.66%
Books: Open
Expected Issue Size: USD Benchmark
Denomination: USD 200k x 1k
Timing: As early as today
Comments: No Receommendation
Risk Rating: 2N
LV: TBC

** COMPS:

BOCOM */A-/* $700M 2.125% JAN-17 T2+177 T3+129

BCHINA A1/*/A $750M 2.125% JAN-17 T2+179 T3+131

ICBCAS A1/*/* $650M 2.10% MAR-17 T2+195 T3+147 (gtee structure)



Issuer: China Construction Bank (Asia) Corporation Limited

Issuer Ratings: A2 Stable (Moody’s)

Expected Issue Rating: A2 (Moody’s)

Ranking: Senior, Unsecured

Format: Reg S, Registered

Size: US$ Benchmark

Tenor: 3 Years

Details: SEHK Listing, US$200k/1k Denoms, English Law

Joint Global Coordinators: CCB International, HSBC

Joint Bookrunners: Bank of China (Hong Kong), CCB International, HSBC, ICBC (Asia), Standard Chartered Bank, UBS

[starrynight]

SIA:

Initial Yield guidance at cost: 7-Year: 3.145% area / 10-Year: 3.75% area
Books: Books open
Expected Issue Size: 7-year - 200mio / 10-year – 300mio
Denomination: SGD 250k x 250k
Timing: Today’s business
Comments: No Receommendation

Current SIA 3.22% 07/2020 is trading at 2.88% on offer side

Risk Rating: 4N
LV: TBC (Indicative 75%)

Issuer: Singapore Airlines Limited
Status: Senior, Unsecured, Fixed Rate
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA, issued off the S$2bn Multicurrency MTN Programme
Tenor: 7 years | 10 years
Issue Size: SGD 200 million | SGD 300 million
Yield: 3.145% | 3.75%
Payment: Semi-annual, actual/365 (fixed)
Issue Date: 8 April 2014
Maturity Date: 8 April 2021 | 8 April 2024
Details: SGD250k denoms / Singapore Law / CDP / SGX-ST
Sole Bookrunner: DBS

[starrynight]

Teaser for Vibrant (FKA Freight Links)

Rank: Subordinated Perpetual Securities
Tenor: Perpetual (Non-call 3.5 years)
Call feature: At Par, at the end of 3.5 years or every coupon payment thereafter
Coupon Step-up: 5% (One time step-up) if the bond is not called at the end of year 3.5
Coupon Reset: Prevailing 3year SGD Swap Offer Rate + initial spread + one time step up margin
Coupon Guidance: 7.5% area
Expected Issue Size: SGD 75mio to 125mio
Denoms: SGD 250k x 250k
LV: 55%
Risk Rating: 5C

[starrynight]

Swiber 2.5 yr bond issuance today, plus Tradehaven commentary:

SWIBER SGD 2.5 YR ISSUE

Issuer: Swiber Holdings Limited
Status: Direct, unconditional, unsubordinated and unsecured Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenure: 2.5 Years
Issue Size: TBD
Redemption for Taxation Reasons: Yes, in accordance with the Programme
Redemption upon Cessation or Suspension of Trading of the Issuer’s Shares: If
(i) the shares of the Issuer cease to be listed or admitted to trading on the SGX-ST or
(ii) trading in the shares of the Issuer on the SGX-ST is suspended for a continuous period of more than 14 market days, Issuer shall, at the option of noteholders, redeem the Notes at par
Payment: Semi-annual, actual/365 (fixed)
Use of proceeds:Refinancing existing borrowings of Issuer and its subsidiaries
Details: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
Listing: SGX-ST

- New Swiber SGD 2.5yr announced on the back of strong reverse inquiries

- Initial Price Guidance: 5.75% area

- PB Selling Concession: 50 cents

- Timing: This week’s business, as early as today

- Comps:
Swiber 7 2016 at 5.44%
Swiber 7.125 2017 at 5.93%
Ezra 4.75 2016 at 4.27%

Credit Highlights:

- Listed on 8 November 2006, Swiber is a world class integrated construction and support services provider to the offshore oil and gas industry, offering a wide range of offshore EPIC and marine support services across the Asia Pacific, Middle East, and Latin America regions.

- Swiber achieved record revenue and net profit for the second consecutive year-running for FY2013. Swiber’s FY2013 revenue rose 11.2% to hit US$1.1 billion from US$952.2 million for FY2012 and net profit increased 45.3% to US$90.9 million in FY2013, up from US$62.5 million in FY2012.

- Swiber’s order book stands at approximately US$800 million as of 27 Feb 2014.

If I am not mistaken, the net profit increase is only due to 1 factor.

“Other operating income increased by US$41.3 million or 169.4%, from US$24.4 million in FY2012 to US$65.7 million, the increase was due mainly to:

As announced via SGXNET on 3 October 2013, the Company has entered into an option agreement dated 2 October 2013 (the “Option Agreement“) with Vallianz Holdings Limited (“Vallianz“) pursuant to which Vallianz shall issue and the Company shall acquire an aggregate of 500,000,000 share options (the “Options“) with each Option carrying the right to subscribe for one (1) new ordinary share in the capital of Vallianz (the “Option Share“) at the exercise price of S$0.055 per Option . Such options were accounted for in accordance to FRS 39 – Financial Instruments: Recognition and Measurement, classified as financial asset that is designated on initial recognition as one to be measured at fair value with fair value changes recognised in profit or loss, as such, the Company recognised a fair value gain of US$56.8 million in other income.”

Bond Maturities – SGD 725 mio
Bank Loans – USD 258 mio

Swiber Bond Maturities

Swiber Bond Maturities

swiber loans

Working lines are typically secured on company assets and inventory etc. I am not sure if its the same in Swiber’s case, but if it were, that would make bonds subordinated to the loans.

Not that is bothers me that the market cap of the company is SGD 408 mio and they are running on 4.4 times financial leverage (Ezra 2.9 times, Ezion 2.7 times) because out of their US 90 mio profits, US 62 mio is attributable to the owners of the company, leaving only about 22 mio to the rest of the shareholders. Such companies are gems ! because the owners will ensure equity interests are protected.

Opps, but we are talking about bonds here.

Take a look at the poor Swiber bonds which will suffer because of this 5.75% i.e. all the 2016-2017 papers.
Issuer Name Coupon Maturity Curr Bid Price Ask Px
Swiber Capital Pte Ltd 6.5 Aug-18 SGD 99.45 100.35 6.65% 6.40%
Swiber Holdings Ltd 7.125 Apr-17 SGD 102.93 103.50 6.05% 5.85%
Swiber Holdings Ltd 9.75 PERP SGD 95.00 96.00 13.59% 12.79% callable 09/2015
Swiber Holdings Ltd 7 Jul-16 SGD 103.02 103.75 5.55% 5.20%
Swiber Holdings Ltd 6.25 Jun-15 SGD 101.25 102.00 5.19% 4.52%
Swiber Holdings Ltd 5.9 Jul-14 SGD 100.01 100.04 5.80% 5.70%
Swiber Holdings Ltd 5 Oct-14 USD 103.83 105.32


I also like the clause of a mandatory redemption at 100 if the shares of the company are suspended for more than 14 days. That is heart warming, if there is anything to distribute to bondholders in the event.

So 5.75% ? for 2.5 years ? i.e. Oct 2016 maturity.

Ezra did a 2 year at 4.75% and Vallianz, their 2 year at 7.2%.

If I put a gun to my head, I will give Vallianz a second look, no ? And this will not be such a hard sell as Vallianz as the bankers are only paid half the Vallianz commission this time.

[cbsh38584]

Sold my Old citi Pacific 7.785 USD Perp bond @99 in Apr13 (now 93).

Just bought the new citi pacific 8.625% USD Perp issued(price=100) in May 2013 @ 94.75. Took the calculated risk to buy & will sell within 1 yr.

Citi pacific 8.625% USD Perp bond is one of the top 5 holdings for UOB united Asian bond fund (unit trust) as of 28th June 2013 report.

rdgs,
Vic

Bought Citi Pacific 8.625% Perp bond @0.94.75 US$200k in Aug13. Price is @107. A 13% capital gain.


Citic Pacific Ltd.’s perpetual bonds have jumped by a record since the steelmaker said last week it will buy its parent’s main operating unit.

Prices on the manufacturer’s dollar-denominated 8.625 percent notes with no set maturity have leapt 9.9 cents on the dollar since March 25 to 107.01, the most for any five-business-day period, according to data compiled by Bloomberg. The company said on March 26 it will absorb about $36 billion of assets from state-owned parent Citic Group Corp.

[starrynight]

Congrats! That was a really good "trade"

Bought Citi Pacific 8.625% Perp bond @0.94.75 US$200k in Aug13. Price is @107. A 13% capital gain.


Citic Pacific Ltd.’s perpetual bonds have jumped by a record since the steelmaker said last week it will buy its parent’s main operating unit.

Prices on the manufacturer’s dollar-denominated 8.625 percent notes with no set maturity have leapt 9.9 cents on the dollar since March 25 to 107.01, the most for any five-business-day period, according to data compiled by Bloomberg. The company said on March 26 it will absorb about $36 billion of assets from state-owned parent Citic Group Corp.

[starrynight]

Today's issuance:

Yield guidance at cost: 5.5% area
Expected Issue Size: USD 500mio (Capped)
Denomination: USD 200k x 1k
Timing: Today's business
Comments: No recommendation
Risk Rating: 5
LV: TBC

ISSUER: The Democratic Socialist Republic of Sri Lanka
ISSUER RATINGS: B1 stable (Moody's) / B+ stable (S&P) / BB- stable (Fitch)
EXP. ISSUE RATINGS: B1 (Moody's) / B+ (S&P) / BB- (Fitch)
FORMAT: 144A / Reg S
STATUS: Fixed rate, Senior unsecured
TENOR: 5-year
SIZE: US$ 500M (Capped)
TERMS: SGX Listing, 200k/1k Denoms, New York Law
BOOKRUNNERS: Citigroup, HSBC, Standard Chartered Bank

[starrynight]

OCBC:

Yield guidance at cost: CT5+265bps area à Indicative Yield 4.32%
Books: Open
Expected Issue Size: USD Benchmark
Denomination: USD 200k x 1k
Timing: As early as today
Comments: No recommendation
Basel III compliant Tier 2 Subordinated Notes
Risk Rating: 5C
LV: Indic 60%

ISSUER: Oversea-Chinese Banking Corporation Limited (“OCBC”)
ISSUER RATINGS (M/S/F): Aa1 / AA-/ AA-
EXPECTED ISSUE RATINGS (M/S/F): [A2] / [BBB+] / [A+]
SECURITY DESCRIPTION: Basel III compliant Tier 2 Subordinated Notes
FORMAT: 144A/Reg S drawdown from Issuer’s GMTN Program
SIZE: USD Benchmark
TENOR: 10.5NC5.5
RANKING: Direct, unsecured and subordinated obligations qualifying as Tier II Capital Securities
OPTIONAL ISSUER CALL: One-time issuer call in year 5.5, subject to MAS approval
INTEREST: Fixed for the first 5.5 years, thereafter reset at then prevailing 5-year USD mid swap rate plus the Initial Credit Spread
TRIGGER EVENT: Earlier of (i) the MAS notifying the Issuer in writing that a write-off is necessary, without which the Issuer would become non-viable; and (ii) a decision by MAS to make a public sector injection of capital, or equivalent support, without which the Issuer would have become non-viable, as determined by MAS
EARLY REDEMPTION EVENTS: Change of Qualification Event or for taxation reasons, subject to MAS approval
BOOKRUNNERS: BofA Merrill Lynch(B&D) / HSBC / J.P. Morgan / OCBC
TERMS: SGX-ST Listing, $200k / $1k denoms, English Law (except subordination provisions governed by Singapore Law)
USE OF PROCEEDS: General corporate purposes

[starrynight]

Off-topic, but update on PACC Offshore IPO. I guess if the richest man in M'sia is cashing out, not a good idea to be on the other side of the trade?

ISSUER: PACC Offshore Services Holdings Ltd. (“POSH”)

LISTING: IPO on Mainboard of SGX-ST

DESCRIPTION - More detailed information can be found in POSH Preliminary Prospectus dated 7 April 2014

Please see the link to MASNET for preliminary prospectus, under ‘Share Offers – ‘Latest’ : https://opera.mas.gov.sg/ExtPortal/P...s.aspx?idx=SHR

1. Business
a) Largest Asia-based international operator of offshore support vessels and one of the top 5 global operators
b) Diversified fleet servicing offshore oil and gas exploration and production activities including anchor handling services, ocean towage and installation, ocean transportation, heavy-lift, offshore accommodation services and harbour towage and emergency response services

2. Fleet & Global Presence
a) Operates 110 vessels as of the Latest Practicable Date including AHTS, AHT, ocean-towing tugs, PSV, offshore accommodation vessels, utility vessels, crane and deck barges, among others, with 15 vessels on order and scheduled for delivery
b) Worldwide operations currently serving offshore oilfields in Asia, Africa and Latin America
c) Customers include major oil companies and large international offshore contractors

3. Operations
a) Services provided by POSH within 4 distinct operating segments:
· Offshore Supply Vessels
· Transportation and Installation
· Offshore Accommodation
· Harbour Services and Emergency Response

4. Team
a) Highly experienced and committed management team with a proven track record
b) Management team of varied and synergistic backgrounds with an aggregate sea-going experience of >500 years

5. Strong Parentage
a) The Kuok Group is a well-regarded conglomerate with diversified investments in, among other things, commodities, hospitality, logistics, real estate and shipping businesses
b) The Kuok Group is the single largest shareholding group in listed companies such as Malaysia-listed Malaysian Bulk Carriers Berhad and Hong Kong-listed Kerry Properties Limited


ROLE OF DBS BANK: Joint Issue Managers, Joint Bookrunners and Joint Underwriters with Bank of America Merrill Lynch and OCBC Bank

GLOBAL OFFERING SIZE
Indicative tranching of base deal size of up to 337,625,000 shares of which:
· Placement – Up to 196,820,000 shares
· Cornerstones – Up to 85,605,000 shares
· Reserve - Up to 25,200,000 shares
· Singapore Public Offer - Up to 30,000,000 shares

GREENSHOE OPTION: Up to 46,125,000 shares

INDICATIVE PRICE RANGE: S$1.13 - S$1.24 per share

GROSS PROCEEDS (BASE OFFERING): US$304 – 334mm (SG$382 – 419mm)
GROSS PROCEEDS (INCLUDING OVER-ALLOTMENT SHARES): US$345 – 380mm (SG$434 – 476mm)

MARKET CAPITALISATION (BASED ON OFFERING PRICE RANGE)
Approx S$2,057m – S$2,257m (based on post IPO POSH’s share capital of 1,820,000,000 shares)

LOCK-UP: 6 months lock-up for POSH’s shareholders

USE OF PROCEEDS: Repayment of part of the outstanding amounts under POSH’s revolving facilities which have been used for working capital and capital expenditure purposes

INDICATIVE TIMETABLE
· Roadshow/Bookbuilding: 08 April, Tues – 16 April, Wed
· Books open: 08 April, Tues
· Books close: 16 April, Wed (5PM in each region) or subject to notification by the JBRs
· MAS registration / Allocation : 17 April, Thurs
· Singapore Public Offer: 17 April, Thurs – 23 April, Wed
· Expected listing: 25 April, Fri

INDICATIONS OF DEMAND
· SPLIT ORDERS ARE ALLOWED
· Demand to be reflected in SGD, USD or in number of shares ONLY

SELLING RESTRICTIONS: Regulation S Offering

END PLACEE BROKERAGE: 1.0% payable by all investors in the placement

MULTIPLE APPLICATIONS
Multiple applications may be made for
· the placement shares only, or
· the placement shares together with a single application for the public offer shares

[starrynight]

Potential issue by Gallant Ventures:

Summary of Key Terms:
Rank: Senior Unsecured
Tenor: 2-Year
Yield Guidance: Low 6% area
Expected Issue Size: SGD 100mio - 150mio
Denoms: SGD 250k x 250k
LV: 60%
Risk Rating: 4N


Company Description:
· Gallant Venture Limited (GALV) is an investment holding company with a diversified portfolio of businesses primarily focused in Indonesia.

· The group has historically focused its investments in Batam and Bintan in Indonesia, operating the Batamindo Industrial Park and Bintan Industrial Estate as well as providing certain utilities to these industrial parks and Bintan Resorts. Furthermore, it has conducted property development activities on Bintan. In May 2013, the group expanded into the Indonesian automobile market when it purchased a controlling stake (its interest has now risen to 71.49%) in Indomobil Sukses Internasional Tbk (IMAS).

· GALV was first listed on the SGX-Sesdaq in June 2006 before transferring to the Main Board of the SGX-ST in 2007. It has a market capitalization of S$1.42bn (US$1.12bn equivalent) as at 7 March 2014.

[Laguna]

I have just reviewed my position.
will trim some equity holdings next month before my long holiday.
EM has picked up, look good

still holding on to my high yield bond position as find the return is still attractive, but will look into liquidating next year.

[starrynight]

Greece, via Zerohedge:

For the first time since the bailout/restructuring, Greece will issue long-term debt to the public markets. These 5 year-term English Law bonds (which is entirely unsurprising given the total lack of protection local-law bonds suffered during the last restructuring) are expected to yield between 5 and 5.25%. That is modestly higher than Russia, below Mexico, and one-sixth of the yield investors demanded when the crisis was exploding. The secondary market has rallied to this entirely liquidity-fueled level leaving onlookers stunned (and likely Draghi et al. also). Greece must be 'fixed' right? Just don't look at the chart below...

Greece is rated Caa3 by Moody's Investors Service and B- by Standard & Poor's Corp. and Fitch Ratings.

The commotion is US capital markets over huge IPO gains which are due more than anything to very small floats and major 'get rich quick' demand can also be found here as the issuance size is minimal leaving a world of yield chasers spying a European nation offering yields over 5% that is currently not rioting...





Claims that is the best example of positive sentiment and of a new normal are foolish - if nothing else, this is a sign of utter complacency and exuberance.

As WSJ reports, Greece is anything but fixed...

Even with the prospect of a recovery in sight, Greece's economy is still in pain. Since its precrisis peak in 2008, the Greek economy has shrunk by a quarter in size, unemployment is at a staggering 27.5%, and standards of living—made worse by successive government cutbacks—have gone back by a decade or more.



On Tuesday, Greece's two public sector umbrella unions—GSEE and ADEDY—staged yet another general strike over Greece's austerity program, shuttering public sector services across the country.

We'll leave it to BofA's John Wraitch to sum it up...

“It seems everything is bulletproof even when you do get relatively bad news; people are prepared to look straight through it,”



“People are still hunting for yield and in the absence of any more material rise in safe-haven yields that means turning to bond markets that a more rational evaluation might lead you to be cautious about.”

Greek officials are crowing and will announce results tomorrow...

*GREECE TO ANNOUNCE BOND-SALE RESULT IN 24 HOURS: GREEK OFFICIAL
*GREECE'S BOND-SALE TARGET IS EU2.5 BLN: GREEK OFFICIAL
*GREECE'S BOND SALE AIMS TO FILL GAP IN YIELD CURVE: OFFICIAL
*GREECE EXPECTS BOND SALE TO HELP LOWER T-BILL RATES: OFFICIAL
*GREECE HAS `STRONG DEMAND' FOR BOND SALE: GREEK OFFICIAL

Today's issuance:

Yield guidance at cost: 5.5% area
Expected Issue Size: USD 500mio (Capped)
Denomination: USD 200k x 1k
Timing: Today's business
Comments: No recommendation
Risk Rating: 5
LV: TBC

ISSUER: The Democratic Socialist Republic of Sri Lanka
ISSUER RATINGS: B1 stable (Moody's) / B+ stable (S&P) / BB- stable (Fitch)
EXP. ISSUE RATINGS: B1 (Moody's) / B+ (S&P) / BB- (Fitch)
FORMAT: 144A / Reg S
STATUS: Fixed rate, Senior unsecured
TENOR: 5-year
SIZE: US$ 500M (Capped)
TERMS: SGX Listing, 200k/1k Denoms, New York Law
BOOKRUNNERS: Citigroup, HSBC, Standard Chartered Bank

[starrynight]

Another China bond issuer gone bust, from Zerohedge:

Another week, another Chinese default.

A month after Chaori Solar's default turned on its head a long-held assumption that even high-yielding debt carried an implicit state guarantee, another Chinese firm has succumbed to the inevitable outcome resulting from a lack of cash flows. As a reminder, a technical default late last month by a small construction materials firm, Xuzhou Zhongsen Tonghao New Board Co Ltd, was the first in China's high-yield bond market. However, in that case the guarantor of that bond eventually agreed to fund the required interest payment, resulting in the first bailout of the first high yield default. Still if Xuzhou didn't want the distinction of the first Chinese HY default, many are lining up for that particular prize - such as a small manufacturer of polyester yarn based in China's wealthy Zhejiang province has declared bankruptcy, threatening its ability to meet an interest payment on a high-yield bond due in July.

According to Reuters, the firm sold 60 million yuan ($9.7 million) in bonds in a private placement in January 2013 at an interest rate of 11 percent. The next interest payment is due on July 23, while the bond matures in January next year.

Reflecting the government's new attitude towards default, the China Securities Regulatory Commission (CSRC) described the Xuzhou Zhongsen default as a commonplace event.



"(The Xuzhou Zhongsen bond) was issued to investors according to regulations, and the default is an isolated risk event. The commission will abide by market-based principles and handle the case according to law," CSRC spokesman Deng Ge said at the agency's weekly press conference on Friday.

And it is no secret that as the weeks keep rolling in, so will many more defaults:

Analysts widely expect more defaults on loans, bonds, and shadow bank products this year. Semiconductor, software, and commodities firms are among the most at risk for default, a Reuters analysis of more than 2,600 Chinese companies showed.

The Xuzhou Zhongsen default marked the first ever in China's high-yield bond market, which the securities regulator launched in June 2012 in a bid to offer a new financing channel for small, private firms. Such firms often struggle to access credit in China's state-dominated financial system. Zhejiang Huatesi's bond was also issued in that market.

Pengyuan Credit Rating Co Ltd gave Zhejiang Huatesi Polymer's bond an A+ rating when it was issued. That is among the lowest ratings at which bonds are commonly sold in China's market.

Naturally, there is the possibility that this too bankruptcy will be delayed by a post-last minute payment by the guarantor, another polyester firm.

An executive at Dongguan Securities Co Ltd, which served as underwriter on the bond, told Reuters on Tuesday that the guarantor on the bond is likely to meet its obligation to make interest and principal payments if the issuer is unable to do so.

The bond carries an unconditional guarantee by Tianlong Holding Group Co Ltd, another polyester firm in Zhejiang. It is also secured by land rights owned by the company and personal assets owned by the controlling shareholder, the underwriter said.

"There are various different reasons (for Zhejiang Huatesi's problems). Factors affecting that sector, the influence of industrial restructuring, etc," the executive said.

Still, even with a bailout, the scariest thing is that the value of the assets backing the bond at the originator level is a resounding zero: "The phone number on Zhejiang Huatesi's website has been disconnected, according to an automated message."

Expect many more phone disconnections in China as the biggest ever Minsky moment begins to unwind.

[starrynight]

GALLANT VENTURE SGD 2YR – UPDATE

- Orderbook is in excess of S$900MM

- Final price guidance at 5.95% (the number)

- Issue size: S$175mm (will not grow)

- Book subject at 2.30PM SG time

Potential issue by Gallant Ventures:

Summary of Key Terms:
Rank: Senior Unsecured
Tenor: 2-Year
Yield Guidance: Low 6% area
Expected Issue Size: SGD 100mio - 150mio
Denoms: SGD 250k x 250k
LV: 60%
Risk Rating: 4N


Company Description:
· Gallant Venture Limited (GALV) is an investment holding company with a diversified portfolio of businesses primarily focused in Indonesia.

· The group has historically focused its investments in Batam and Bintan in Indonesia, operating the Batamindo Industrial Park and Bintan Industrial Estate as well as providing certain utilities to these industrial parks and Bintan Resorts. Furthermore, it has conducted property development activities on Bintan. In May 2013, the group expanded into the Indonesian automobile market when it purchased a controlling stake (its interest has now risen to 71.49%) in Indomobil Sukses Internasional Tbk (IMAS).

· GALV was first listed on the SGX-Sesdaq in June 2006 before transferring to the Main Board of the SGX-ST in 2007. It has a market capitalization of S$1.42bn (US$1.12bn equivalent) as at 7 March 2014.

[starrynight]

Overseas Education:

Yield guidance at cost: 5.375% area
Expected Issue Size: SGD 150mio
Denomination: SGD 250k x 250k
Timing: As early as today
Risk Rating: TBC
LV: TBC

Issuer: Overseas Education Limited
Status: Senior Unsecured Fixed Rate Bonds
Issue Rating: Unrated
Issue Size: S$150 mil (will not grow)
Selling Restrictions: Reg S, S274 & 275 of Singapore SFA
Tenor : 5-year
Coupon: TBD
Payment: Semi-annual, ACT/365 (Fixed)
Issue Date :[*] April 2014
Maturity Date :[*] April 2019

Financial Covenants: (i) Consolidated Tangible Net Worth shall not be less than S$100,000,000; (ii) Consolidated Total Secured Borrowings to Consolidated Total Assets shall not be more than 0.20:1; (iii)Consolidated Total Borrowings to Consolidated Tangible Net Worth shall not be more than 1.5:1; and (iv) EBITDA to Interest Expense shall not be less than 2.5:1

Documentation: Preliminary Information Memorandum dated 7 April 2014
Denomination: S$250k
Governing Law: Singapore Law
Listing : SGX-ST
Clearing : CDP
Sole Lead Manager: UOB

[starrynight]

China Unicom:

Initial Yield guidance at cost: 4.25% area
Books: Open
Expected Tap Size: CNH Benchmark
Denomination: CNH 1mio x 10k
Timing: Today’s business
Comments: No Recommendation
Risk Rating: TBC
LV: TBC

ISSUER: China Unicom (Hong Kong) Limited
STATUS: Fixed rate, Senior unsecured
FORMAT: Reg S registered off MTN Programme
SIZE: CNH Benchmark
TENOR: 3Y
INITIAL PRICE GUIDANCE: 4.25% area
USE OF PROCEEDS: For working capital and general corporate purposes
TERMS: HKSE Listing; CNY1mm/10k denoms, English Law
SOLE GLOBAL COORDINATOR: Bank of China
JOINT BOOKRUNNERS
& JOINT LEAD MANAGERS: Bank of China, CICC HK Securities, J.P. Morgan and Nomura
CLEARING: CMU with linkage to Euroclear with Clearstream
TIMING: As early as today

Comparables:

Security Maturity YTM Mdy S&P

SBSG 4.15 17 03/01/17 3.79 A3 A-
HUANEN 3.85 16 02/05/16 3.85 N.A. N.A.
CHGDNU 3 3/4 15 11/01/15 3.45 A3 N.A.

Profile:
The Group is an integrated telecommunications operator in China providing mobile voice and value-added, fixed-line voice and value-added, fixed-line broadband, data communications and other telecommunications services to its customers. The Group, China Mobile and China Telecom are the three major telecommunications operators in China. In 2013, the Group’s market share reached 21.1% in terms of service revenue6. As at the end of February 2014, the total subscribers of the Group’s mobile, local telephone and broadband businesses reached 439.5 million.

[starrynight]

Hang Lung Properties:

Yield guidance at cost: T7 + 250BPS Area à Indicative Yield 4.75%
Books: Open
Expected Issue Size: USD Benchmark
Denomination: USD 200k x 1k
Risk Rating: 4N
LV: Indic 70% (TBC by PB LV Team)

Issuer: HLP Finance Limited
Guarantor: Hang Lung Properties Limited (“HLP”)
Guarantor Ratings: Unrated
Status: Fixed rate, Senior unsecured
Documentation: Drawdown off the US$3 billion MTN Programme
Format: Reg S, Registered Form
Size: US$ Benchmark
Tenor: 7 Years
Details: HKSE Listing, US$200k/1k Denoms, English Law
Joint Bookrunners: HSBC, J.P. Morgan

Comparables:
HLPPY US$500MM 4.75% JUN 22 T+210 / 4.788%
HYSAN US$300MM 3.50% JAN 23 T+149 / 4.178%
HKLSP US$500MM 4.50% JUN 22 T+134 / 4.028%
HKLSP US$400MM 4.625% JAN 24 T+150 / 4.188%
SWIPRO US$500MM 4.375% JUN 22 T+128 / 3.968%
SWIRE US$700MM 4.50% JUN 23 T+137 / 4.058%
SUNHUN US$900MM 4.50% FEB 22 T+130 / 3.985%

Profile of Guarantor:

The Guarantor (stock code: 00101) is a leading real estate developer based in Hong Kong with an extensive property portfolio in Hong Kong, in addition to which it has been building, owning and managing world-class commercial complexes in mainland China since the 1990s. The Guarantor has 10 major property developments located at prime locations in eight major citiesacross mainland China and has become one of the leading developers of world-class commercial complexes across mainland China.



It is a constituent stock of Hong Kong’s Hang Seng Index and the Hang Seng Corporate Sustainability Indices. The Guarantor is one of the world’s largest pure real estate listed companies by market value. As at 31 December 2012, the Guarantor was approximately 50.65% owned by, and a subsidiary of, Hang Lung Group Limited (‘‘HLG’’) (stock code: 00010).



From its foundations in Hong Kong, the Guarantor has gradually branched out into mainland China, winning acclaim for the quality of its modern architectural design, premium property management services and the central location of its commercial complexes. The Guarantor is committed to high levels of corporate governance and continues to be regarded as one of the best run companies in Hong Kong, consistently achieving high and sustainable returns for its shareholders.

[cbsh38584]

STRAIGHT BOND with FIXED MATURITY DATE for retail investors


A bond is an IOU from an issuer to you. if you hold the bond to maturity, the only risk there are is the default risk. Meaning if the issuer files for bankruptcy, you will lose everything.


A shorter term bond carries less risk because people are able to predict nearer term outcome than longer term prospects when it comes to default risk. Thus the interests are usually lower.


A bank deposits (up to a certain amount) are guaranteed by deposits insurance against defaults. They are also more liquid, which means a trade off between risk and returns. I think your Fixed deposit is covered by SG Government for up to $20k only


RETAIL investors can trade in corporate bonds in smaller denominations.It will be traded in lots of $1,000 instead of the usual $250,000.Retail investors can subscribe to the NEW IPO bonds at ATMs through POSB , DBS, OCBS , UOB etc.


When one gets a bond, one will get annual interest & by maturity date, to get principal amt back. You can choose to hold the bond till maturity, or sell the bond in the open mkt at mkt prices for whatever reason u might have.


Capitalmall trust offers retail investors with an attractive alternative to park their spare cash, paying them an interest rate of 3.08% a year over the next 7 years. This is well above the 1% Fixed deposit currently offered by local & foreigner bank for deposits of up to $50,000.


If interest rate were to go up within this 7 years (very likely), Capitalmall trust bonds price will drop. If held to maturity, interest rate should not be a factor.You will still get the coupon payments plus capital after 7 years. Unless capitalmall trust bankrupts.

Some of the Retail bond listed in SGX
CapMallA3.8%b220112
CapMallTrb3.08%210220
SIA 2.15%b150930

[cbsh38584]

Issuer: Trafigura Beheer B.V.
Securities: SGD Perpetual Resettable Step-Up Subordinated Securities
Rating: Not rated
Status: Subordinated unsecured
Maturity: Perpetual NC5
Size: SGD benchmark
Initial Price Guidance: Mid 7% Area
Call Options: 2019 and on any interest payment date thereafter at par
Interest Rate: Fixed rate of [TBC]% until 2019, reset thereafter every 5 years based on 5yr SGD swap offer rate plus initial credit spread
Step Up: 100 bps in February 2024
Optional Interest Deferral: Optional, subject to certain conditions including non-payment of dividends in the preceding 12 months; cumulative and compounding
Special Event Call Options: Special issuer redemption right for withholding tax event and minimal outstanding amount at par, and income tax deduction and accounting events at 101%
Governing Law: English (Dutch law for subordination provisions)
Offering Restrictions: Reg S, S274 & 275 of Singapore SFA
Interest Payments/Basis: Semi-annual / Actual/365 (Fixed)
Denoms: SGD250k X SGD250K
Listing: SGX-ST
Clearing: Euroclear / Clearstream
Use of Proceeds: General corporate purposes and investments
Joint Global Coordinators and Active Bookrunners: CS, DBS Bank Ltd.(B&D)
Bookrunners: OCBC, SCB
Timing: This week’s business, as early as today
Risk Rating: 5C
LV: 65%

Trafigura Beheer B.V SGD perp bond 7.5% IPO on Mid Feb14. price now is 102 to sell.


Amtek engineer SGD Straight bond 6.9% IPO in Mar2014. Price to sell now is 102.5.


Apply for China Citi bank USD Perp bond for US$400k (mon US$200k) . But not allocated. Issue size US$300m. Final book >US$5.7 billion. Price to sell is 101.

[Werther]

Deat cbsh and starry

Anything good to buy now? Ocbc preference share good? Those you both put up looks interesting but as I am not familiar, I dare not touch.

How about equities? Tks

[Laguna]

Deat cbsh and starry

Anything good to buy now? Ocbc preference share good? Those you both put up looks interesting but as I am not familiar, I dare not touch.

How about equities? Tks

I doubt Vic and starry will answer you

Your question reflects your mind set in investment.

[starrynight]

Werther,

As Laguna rightly pointed out, depends on what you want out of the investment (significant capital gains, safe returns while u wait to buy property, etc.), and equally importantly, your investment time horizon and view on the interest rates going forward.

For me, I'm looking for safe investments (i.e. so that I am comfortable using leverage) and limited time to maturity so that I have the funds available to buy property in H2 2015 / 2016 if the price is right.

I've realised that for my kind of "low class" banking, the bank does not offer me a competitive price, so I can't buy with a view to selling in the secondary mkt before maturity. Limits my options.

So in the past couple of months I've bought the Swiber 2015 and Cambridge 2015 to park my funds with leverage. Better than sitting in the bank doing nothing.

Deat cbsh and starry

Anything good to buy now? Ocbc preference share good? Those you both put up looks interesting but as I am not familiar, I dare not touch.

How about equities? Tks

I doubt Vic and starry will answer you

Your question reflects your mind set in investment.

[Werther]

Werther,

As Laguna rightly pointed out, depends on what you want out of the investment (significant capital gains, safe returns while u wait to buy property, etc.), and equally importantly, your investment time horizon and view on the interest rates going forward.

For me, I'm looking for safe investments (i.e. so that I am comfortable using leverage) and limited time to maturity so that I have the funds available to buy property in H2 2015 / 2016 if the price is right.

I've realised that for my kind of "low class" banking, the bank does not offer me a competitive price, so I can't buy with a view to selling in the secondary mkt before maturity. Limits my options.

So in the past couple of months I've bought the Swiber 2015 and Cambridge 2015 to park my funds with leverage. Better than sitting in the bank doing nothing.

Hi Laguna and Starry

Thanks for responding. Yes, now will waiting to buy, my funds in the bank is earning peanuts and do not want to tie up and may need to utilizes if find something interesting. How've, with the ABSD, it is so heart pain.... Anyway, it's at least not a 'bad' problem..should count my blessing.

Buy shares also lose $$ so now I am very careful...by the way.. How do we find out more about swiber and Cambridge?

[cbsh38584]

Deat cbsh and starry

Anything good to buy now? Ocbc preference share good? Those you both put up looks interesting but as I am not familiar, I dare not touch.

How about equities? Tks

I am not a expert to advise U what stock to buy. Only your banker is qualified. But I can let U know what to avoid the pitfalls in investments. Pls go to this website & learn from him. http://singaporeanstocksinvestor.blogspot.sg/

NOT KNOWING WHAT YOU WANT
What are U investing towards - Children education or retirement fund (good quality Perp bond ?) or income (more safety) or growth (less safety).

If you want an investment that produces consistent income, you have to understand that it will not grow as much. Quality Dividend blue chip stock like SPH , Singpost, Telco stocks etc/ Bond. Or bond fund (unit trust).

If you want an investment that grows, you have to be willing to accept less safety. Stock like Yoma (burma) or Rowsley (Iskander) , hyflux etc


TAKING RISK TOO LIGHTLY
SOME people take too much risk, others take none at all - both are mistakes. The amount of risk taken correlates to the level of returns - the higher the risk, the higher the returns.

1st state resource fund Launched in 2006 @$1. Went up $1.80 in 2007. Now 2013 back to $1.

UOB Global telcom unit trust Launched in 1999 @$1. Went up $2 in 2000. Now 2013 drops to 0.73.

Some of the good unit trust for long term. Prulink SG managed fund , Schroder Asian growth , Aberdeen pacify equity , AIA regional equity, 1st state dividend fund etc.

PLACING ALL EGGS IN ONE BASKET
YOU need to diversify and spread your investments so that you can limit your exposure to any single sector (like commodities , bond, Financial etc) or single country risk ( SG , HK , China , INDIA etc) or Single Currency risk (USD, AUD , NZ, SGD, YEN etc).

if you are invested in good short dated bonds, you dont really need to worry about interest rate risks if you plan to hold short dated bonds till maturity. Your returns are already locked the moment you purchase the bonds. So if you happy with the yield to maturity of current bonds, Don’t be bother of the price fluctuations.


Longer dated bonds are more risky than shorter dated bonds. More risk means higher potential returns. So its all depends on your risk tolerance

Some bond or fixed income fund like
Eastspring Asian bond Fund,
Fullerton Bond fund
etc etc etc.


Good quality dividend stocks is very important. It will ride through the crisis. Dividend Stocks Can Pay Investor’s for Being Patient.. it has Outperformed Non-Dividend Stocks over the Long Term.




CAVING IN TO PANIC - Too emotional.
DO NOT start panicking when there are short-term fluctuations. For your LT investments, you should not be overly alarmed when movements are experienced in the short term.


I bought Prulink SG managed fund in 1992 @1.00. Now the price is $3.70. It has gone through a major big crisis in 97/98 . 2001 Sept 11, SAR 2003 & 08/09 Lehman crisis. It Ave return est 6% since inception. But I sold off when it was 1.20 in the 1993. I did not stick to my long term plan.


I bought Schroder Asian growth fund in @$1 in 90s. During the 97/98 Asia financial crisis, I panic & sold off at 30% loss. The price is now 2.61 . It has ride through major crisis like the 97/98 Asia financial crisis, 2001 Sept 11 , Sar 2003 & 2008/09 Lehman crisis. It ave return since inception is est 8%.


LISTENING TO HEARSAY/HERD INVESTING/GREED
DO NOT fall prey to herd instinct. Avoid making big financial decisions based on hearsay. Buy when there is fear in the market.

　
When U make any investment, if your mind is focus on high return as 1st priority . Then U will be easily blind by the risk you are in. Majorities Retail investors see high return 1st priority when they buy share. They ignore the high risk. They like to play speculative penny stocks due to it low cost & high liquidity with High profit.


Long term, they will suffer through big losses due to their weak emotional trading behavior. Too painful to cut loss. Hesitate to cut loss at the initial stage. Hesitation can be very costly.


Patience- most important, but most difficult, virtue in investing.
One of the biggest weakness investors have is that they believe that the stock market is a way to get rich quick. In other words, investors lack of patience.

Investors with longer-term expectations were also greatly affected by the major correction in 2008, but if they were confident that they bought sound investments, they would have kept them and now as the market has recovered strongly since then, they would have now recovered all or almost all of their paper losses


Finally, pls DO NOT assume that once you have your plans and portfolio in place, you do not have to review or re-balance it. You need to monitor your investments regularly to capitalize on market changes and movements.


To be a successful investor
The learning process is long and treacherous, involving one to lose to learn. Only a few people really start off earning big money first. The losing part makes the person a better player in the future. Only when U hv gone through 1997/98 & 2008/09big crisis, then you will realize GREED & herd instinct investing will bring disaster to you .

　[/B][/B]

[Werther]

Dear Cbsh

Always enjoy reading your insight on yr investment journey and sharing your own experience, citing the ups and downs and your encouraging words. Of course, at the end, it is still ourselves if we want to take the leapt or not.

Pls continue to come in and give us some tips on your value investing.

Regards

[starrynight]

Do you mean underlying financials of the company, or info on the bonds?

Company: get the quarterly financial announcements from the SGX website, as well as stockbroker reports (with a big pinch of salt)

Bonds: that's a tough one. For new issuances, sometimes there is a commentary on Tradehaven website. I have built up my own "database" over the years by saving copies of the info-memos attached to emails from my banker with the bond offering. You can get mkt prices from the Tradehaven website as well as copies of The Edge.

Buy shares also lose $$ so now I am very careful...by the way.. How do we find out more about swiber and Cambridge?

[dtrax]

Tiong Aik Corporation, SGD, 2.5yrs, coupon rate ~4.5-5%, issuance size $150mil, offer price at 100.50