Newbie
Does the NOL COC clause include any premium offered for early redemption?
While NOL is partially govt owned, it has racked up huge losses over the years. Others like PIL is offering 7.x%. Before being privatised, PIL was actually soing quite well while NOL was in the red. Is the risk worth it? 2 more years till 2017.
Note that most banks offer leverage on the NOL papers.
Junior
NOL 4.25%(due Apr 2017) to sell @100.2. To buy is @100.7 indicative (YTM=3.8%)Originally Posted by newbiebondinvestor
There is a coupon set up of 1.5% if there is a change of control. FYI, Temasek own 67%
PIL 5.9% (due Jul17) to sell @98.
PIL is doing better than NOL but it is selling below par (98).
While NOL is selling at a premium 100.2. Maybe because of Temasek 67% stake.
Junior
NOL Apr17 LTV 85%
PIL Jul17 LTV 70%
Newbie
Well means there might be some meat when COC kicks in and if you believe NOL has the means to redeem the bonds in the event the GO doesnt go through.
Newbie
May I know which bank is giving the above LTV?
Junior
Most of the foreigner & local banks do give LTV for NOL short dated 2017 bond. The LTV % given may
varies from different banks. I am not sure about PIL.
Junior
I have started to reduce my bond portfolio especially SGD illiquid bond since Jul15 & have not replaced any of the SGD bond.
With the cash on hand. I started to switch more to dual currency investment (DCI) or Finer (another term of DCI).
Our SGD has appreciated against major currency like AUS/NZ/GBP/EURO/YEN etc by between 15% to 20% since 2012. I think
it may not be possible for SGD to further appreciate against AUS/NZ/GBP/EURO/YEN .So I started to do more DCI with SGD base
against AUS which I am more familiar with the FX movement. I did other currency pairing also but more on SGD/AUS.
I have done 6 times pairing SGD base against AUS @ strike level 0.975 to 0.99 since Jul15. Yield 5%. So far none get converted.
Will continue to do the same pairing again until 14 Dec15 (FED meeting on rate hike on 15th/16th Dec15).
If my SGD will to convert to AUS.I will either do the opposite pairing again AUS/SGD or to buy Aus blue chip stock or Aus bond or
put into AUS short term FD to wait for the Aus to appreciate above my strike level (conversion).
Junior
The ECB decision on QE comes before FOMC meeting.
looking at EUR/US$, the market calls for ECB and Fed are rather clear especially after the non-farm payroll last month.
BOJ may not QE as Yen will weaken against US$ for the carry trade.
A$ ....weakening
Amber
How safe is Julius Baer's bond? New issue today.
Issuer : Julius Baer Group Ltd
Instrument : Reg S SGD Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities
Ranking : The AT1 securities will be deeply subordinated, ranking behind Tier 2 instruments, pari passu with other Additional Tier 1 instruments and senior only to equity capital
Issuer rating : A3 (negative outlook) by Moody's
Expected issue rating : Baa2 by Moody's
Size : SGD Benchmark
Tenor : PerpNC5
Price guidance : 6.375% area
Interest :
[•]% payable semi-annually in arrear at a fixed rate to but excluding the First Call Date, reset at the 5-year Mid Swap Rate plus the Margin at the First: Call Date and every five years thereafter The Issuer may, at its sole discretion, elect to cancel all or part of any interest payment, and shall be prohibited from making any interest payment to the extent Distributable Items would be exceeded or if prohibited by national regulations or an order of the regulatorAny interest not paid shall not accumulate or be payable at any time thereafter
Optional redemption : Redeemable at the Issuer’s option at the Optional Redemption Date or on [•] of each year thereafter at the Prevailing Notional Amount, subject to the prior approval of the regulator, if then required
Settlement : [18] November 2015
Listing : SGX
Denomination : SGD 250,000 x SGD 250,000
Clearing : Euroclear/Clearstream
Governing Law : Swiss Law
Amber
NOV 11, 20152:38 PM
SWISS bank Julius Baer's maiden issue of a Singapore dollar (SGD)-denominated, Basel III-compliant perpetual Additional Tier 1 (AT1) bonds is receiving strong interest.
Launched on Wednesday, the initial price guidance for the offering is 6.375 per cent, and indication of interest has reached in excess of S$500 million shortly after the sale began in the morning, a source said.
The Swiss bank last month said that it intends to sell SGD perpetual tier 1 subordinated bonds in a benchmark-sized volume - at a minimum of S$250 million-S$300 million - making it the first foreign bank to issue such a bond in the Singapore market.
The new bonds will likely be the highest-yielding AT1s in the SGD bond universe, since the existing AT1s are issued by the three local banks which are larger and have superior credit ratings, wrote iFAST in a note on the Julius Baer offering on Monday.
Junior
I think it is only good for short term holding.
The LTV given is only 20%. Why ? Because of the write-down trigger event.
Write-down trigger event: Upon the occurrence of a Write-Down Trigger Event, the principal will be permanently written down, pari passu with other instruments with an equal trigger (but before lower trigger instruments), to the extent necessary to remedy the trigger breachA Write-Down Trigger Event shall occur if the Issuer’s Group CET1 Ratio trigger is less than 7.00% (transitional)Full permanent principal write-off upon occurrence of a Viability Event.
Special Event Redemption: Redeemable upon a Tax Event (imposition of withholding tax or loss of tax-deductibility) or a Regulatory Event (full or partial loss of Additional Tier 1 treatment) at the Prevailing Notional Amount, subject to the prior approval of the regulator, if then required.
Junior
Euro pairing is quite unpredictable. So need to be more careful.
A$ has been hovering around 0.97 to 1.02 for the past 5 months.
So pairing SGD base against A$ between 0.975 to 0.99 is quite safe.I maybe wrong.
If it get converted, I will use the A$ to buy A$ bond or A$ blue chip stock etc.
Amber
Maybank is offering LTV 70% as it is an investment grade graded Baa2 by Moody. Recent local bank like OCBC 3.8% Perp also came with AT1 so JB at 6.375% is rather attractive. I was told order book is now at $1.8b as at market closed today.
Newbie
JB bond will list over the counter on sgx, so you can check the offer price easily.
Junior
I was told by my banker that during the 2008/09 crisis, UOB perp bond (without Basel III capital) drop as low as 50.
While Capland straight bond dropped to about 72.
The new Basel III capital rule (implemented in 2011) has a clause for the write-down trigger event. If there is any crisis
bigger than the 2008/09 which it may (or may not)comes (2017? 2018? 2019?). I think those bank who issues a Perp bond
with the Basel III clause,the price may drop even more . So need to be careful. I think it should ok for short term holding.
Right now, no more SGD bond for me unless it is a short dated. I am concentrating more on DCI or Finer targeting 4-6% yield.
CS, the Switzerland bank only give LTV 20% to 30%
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Write-down trigger event: Upon the occurrence of a Write-Down Trigger Event, the principal will be permanently written down, pari passu with other instruments with an equal trigger (but before lower trigger instruments), to the extent necessary to remedy the trigger breachA Write-Down Trigger Event shall occur if the Issuer’s Group CET1 Ratio trigger is less than 7.00% (transitional)Full permanent principal write-off upon occurrence of a Viability Event.
Special Event Redemption: Redeemable upon a Tax Event (imposition of withholding tax or loss of tax-deductibility) or a Regulatory Event (full or partial loss of Additional Tier 1 treatment) at the Prevailing Notional Amount, subject to the prior approval of the regulator, if then required
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Newbie
Yup, it is bail-in instead of bailout. But it is still so many times oversubscribed, I guess either investors dun know the risk involved or their risk appetite is big.
Junior
Final coupon is 5.9%. To buy around 100.4 to 100.6. To sell is 100 ?
Amber
This AT1 is new to the market and my guess is that investors are not so clear its effect especially if banks' capital base is much more than the 7% trigger point. All it takes is another financial crisis and this time bond holders will not be spared.
Newbie
Is anyone holding Unicredit SGD 5.5%? YTC quite high..
Junior
FED versus ECB in december: lift-off versus easing
Recent testimony by Chair Yellen regarding the Fed's confidence in the economy's performance, coupled with the robust consumption-related data in recent weeks (including the sharp rebound in October employment), make a lift-off in December very likely. The soft inflation outlook could still pose some risk for a delay, but it is more likely to affect the signalling about the path of rate hikes than postpone the initial hike into 2016. Indeed, as the lift-off is anticipated, the focus will increasingly shift towards the pace of hikes, especially since market pricing remains (50bp) not only below the Fed's current guidance (100bp) but also forecast (75bp).
In parallel to the developments at the Fed, ECB President Draghi's communication in October provided strong signals for additional monetary policy accommodation in December. Such a step was already expected, but the view has now taken more concrete forms, especially after the ECB communication about potential further depo rate cuts. The ECB in December is expected to announce: 1) a time extension of QE to at least mid-2017 or, alternatively, an explicit commitment to extend QE until the ECB inflation forecast reaches 2%; 2) a 10bp cut to the deposit facility rate to -30bp; 3) additional changes to parameters of QE such as removing the restriction to buy only EGBs yielding above the deposit rate and including German Laender debt in the asset purchase program.
Other measures such as increases of the PSPP's monthly size (ie, from EUR60-70bn currently), the addition of new asset classes, or possibly an abandonment of the capital key rule, remain on the table in principle, but are less likely to be announced in December.
The two opposing policy directions by the Fed and ECB could meaningfully accelerate the USD's appreciation against the EUR. However, policy makers do watch their currencies as well as each other. The risk is that a very rapid exchange rate move could itself influence policymakers not to implement such a 'diverging policies' scenario - which would defeat the predicted scenario. However, recent communication suggests to us that both sides have commensurate motivation to undertake this direction since there is limited room to back track as long as data developments do not change radically.
Source: FxWire Pro - Commentary
13-November-2015 0724
© FxWire Pro 2014. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.
Junior
Currently trading @93+. Callable 2018. I not sure whether the coupon is taxable by the Italy govt.
All time low is 89. Recently low is 91+. I think it is more for tactical trade. Buy low sell high.
Junior
FED versus ECB in december: lift-off versus easing
Recent testimony by Chair Yellen regarding the Fed's confidence in the economy's performance, coupled with the robust consumption-related data in recent weeks (including the sharp rebound in October employment), make a lift-off in December very likely. The soft inflation outlook could still pose some risk for a delay, but it is more likely to affect the signalling about the path of rate hikes than postpone the initial hike into 2016. Indeed, as the lift-off is anticipated, the focus will increasingly shift towards the pace of hikes, especially since market pricing remains (50bp) not only below the Fed's current guidance (100bp) but also forecast (75bp).
In parallel to the developments at the Fed, ECB President Draghi's communication in October provided strong signals for additional monetary policy accommodation in December. Such a step was already expected, but the view has now taken more concrete forms, especially after the ECB communication about potential further depo rate cuts. The ECB in December is expected to announce: 1) a time extension of QE to at least mid-2017 or, alternatively, an explicit commitment to extend QE until the ECB inflation forecast reaches 2%; 2) a 10bp cut to the deposit facility rate to -30bp; 3) additional changes to parameters of QE such as removing the restriction to buy only EGBs yielding above the deposit rate and including German Laender debt in the asset purchase program.
Other measures such as increases of the PSPP's monthly size (ie, from EUR60-70bn currently), the addition of new asset classes, or possibly an abandonment of the capital key rule, remain on the table in principle, but are less likely to be announced in December.
The two opposing policy directions by the Fed and ECB could meaningfully accelerate the USD's appreciation against the EUR. However, policy makers do watch their currencies as well as each other. The risk is that a very rapid exchange rate move could itself influence policymakers not to implement such a 'diverging policies' scenario - which would defeat the predicted scenario. However, recent communication suggests to us that both sides have commensurate motivation to undertake this direction since there is limited room to back track as long as data developments do not change radically.
Source: FxWire Pro - Commentary
13-November-2015 07
© FxWire Pro 2014. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.
I did about S$2m of DCI (or finer) fixing on 30th Nov & mostly 14th Dec15 before the Fed meeting on 15th-16th Dec15.
The yield is ave 4.8%. Tenor >1 mth. Coupon S$8k+. Bond portfolio has drastically reduced from S$4m+ to S$2m+ since Jul15.
SGD base AUS 0.985 ave
SGD base GBP 2.126
USD base Yen 1.24
USD base AUS 0.695
USD base Euro 1.075
Euro base SGD 1.60
Euro base USD 1.15
Newbie
Bought recently at 94. Yes, tax issue needs to be addressed. Not sure why the bond is doing badly as compared to the EUR or USD version. Note that it is the only SIB in Italy
Newbie
Noble under attack again. Its USD bonds still trading way below par. Credit rating might be downgraded.. if they get downgraded (next grade=junk status), expect bond prices to freefall
Junior
U.K. Regulator Blocks CoCo Sales to Individual Investors
===================================
The U.K.’s Financial Conduct Authority will ban firms from selling contingent convertible bonds to individual investors, saying they’re too complex and risky for the mass retail market.
“In a low interest rate environment, many investors might be tempted by CoCos offering high headline returns,” Christopher Woolard, the FCA’s director of policy, risk and research, said in a statement today. “However, they are complex and can be highly risky.”
Under pressure from regulators to boost capital after the financial crisis of 2008, banks have been selling CoCos, a form of fixed-income security that automatically converts into ordinary shares if a firm’s capital falls below a pre-determined level. European regulators last month expressed concern banks may be selling them to consumers without properly explaining the risks. Portugal’s bailout of Banco Espirito Santo SA this week left shareholders and junior bondholders with losses
Senior
http://www.advisoryhq.com/articles/a...hike-expected/
U.S. Employment Surges in October – Takes Wall Street by Surprise
On Friday, November 6th, the much anticipated job report for October was released by the Bureau of Labor Statistics.
US job figures (non-farm payrolls) grew by 271,000 in October, according to the Bureau of Labor Statistics. This number blew past the consensus forecast for a job gain of 180,000 that had been estimated by economists around the globe via a Bloomberg survey.
Federal Reserve officials said last month that they would consider hiking US interest rate at their next gathering (in December).
Federal Reserve Chair Janet Yellen stated this week that a December rate hike was a “live possibility.” One of the Fed's preconditions for increasing US rates was to see “some further improvement in the US job market," which happened with the October job results.
Are Bonds a Good Investment Now? Fed to Raise Interest Rates
Now that the US Federal Reserve is expected to raise interest rates in December, are bonds still a good investment?
Over the last year, investors have grappled with the possibility of the Fed raising interest rates and the impact that an interest rate hike would have on bond investments.
Key questions asked by investors have included, “Are bonds a good investment when the Fed raises interest rates?” “When will the next interest rate hike be?” and, “Will the Fed raise interest rates this year?”
To better understand the answers to these questions, we first need to take a step back and quickly review the key factors that are used to determine bond prices and valuations.
Investing in Bonds Based on Interest Rate Predictions
Major Wall Street firms, as well as institutional investors (hedge funds, trading firms, mutual funds, etc.), maintain highly complex and comprehensive financial models that estimate bond values and predict whether bonds are a good investment at various points in time.
A key variable in their bond valuations are Fed interest rate predictions.
In essence, financial models do not only consider current rates, they also consider future interest rate hikes with regard to the buying and selling of bonds.
The nature of being a bond investor (or any type of investor) is that you have to always look ahead (far ahead), at every point in time, when you are evaluating whether bonds are a good investment.
So, even if the Fed was to raise interest rates today, institutional bond investors would basically take the new interest rate figure, plug that number into their financial models, and immediately start looking ahead for when the next interest rate hike will come.
The goal is to always be one step ahead of the market.
However, if you are an individual investor (or just someone that is interested in buying bonds), how do you determine whether bonds are a good investment now? How do you perform interest rate predictions to effectively compete with hedge funds, mutual funds, and institutional bond investors?
Are Bonds a Good Investment Now or Should You Sell Your Bond Holdings?
To determine whether to invest in bonds now, there are a couple of variables you should consider, in addition to learning how to effectively conduct interest rate predictions.
Key variables to consider include:
Bond yield (how much total return you can expect to get from buying a bond)
Bond rate (the stated bond rate determines the coupon amount that is paid out periodically)
Bond prices (present-day value of the bond if you sell or buy the bond today)
Fed interest rate outlook and predictions (impacts the bond yield)
Market outlook (impacts the bond price)
Bond Yields and Their Correlation with Fed Interest Rates
Bond yields have a direct correlation with Fed interest rates and the outlook on future interest rate hikes.
The reason why the outlook on rates (interest rate predictions) is very important is that investors do not wait for the Fed to raise rates before they decide whether to buy bonds or sell a bond they already own.
As mentioned above, being a bond investor requires you to always be proactive and stay one step ahead of the bond investing pack.
Waiting until the Fed raises interest rates before you act will be acting too late.
It is akin to closing/locking the barn door after the horses have already escaped from the barn.
Looking at the chart below, you can see that bond investors don’t wait for the Fed to act.
Starting in February of 2015, they are already taking action by bidding up 10-yr and 30-yr bond yields.
Across financial markets, the below situation where yields are rising based on interest rate predictions is referred to as "making a bet on the interest rate outlook."
The same 2015-rise in yields can also be noticed when looking at the 5-yr US government bond chart. However, the effect is more pronounced, with longer-term bonds based on the time factor.
As interest rates rise, longer-term bonds lose more value than shorter maturity bonds.
Why do bond investors bid up bond yields based on the interest rate outlook?
To better understand the process above, we need to take a step back and quickly discuss bond valuations.
Bonds Pricing – Interest Rate Impact
The price you would pay to buy a bond today (also known as the bond’s present value) is based on the bond’s coupon payments, the number of overall payments, and the bond’s maturity value…
…all discounted to the present-day based on a set interest rate.
The bond yield (i) used to discount a bond to its present-day value (what the bond is selling for today) is impacted by the future outlook on rates.
In order for a bond to remain competitive as an investment vehicle, the yield on that bond needs to be attractive enough to make investors want to buy the bond.
As such, when bond investors expect Fed interest rates to rise, they start requiring (bidding up) higher bond yields today.
The opposite holds true when investors expect rates to fall.
The above happens because of how investors derive the present value (PV) of a bond investment: the sum total of all future payments discounted by a constantly changing bond yield (i).
Should You Buy/Sell Today – Are Bonds a Good Investment Right Now?
So, back to the questions: Are bonds a good investment now? Should you sell any bonds you currently have? Or should you buy bonds?
The best answer to all of these questions is, “It depends.”
If you want to invest in bonds with the expectation that bond prices will go up (allowing you to earn a return on the capital gains), then bonds might not be a good investment right now.
As seen above, bond yields are going up.
This increase in bond yields is expected to continue into the future as the Fed executes its interest rate hikes.
This means that bond prices will only continue to drop, resulting in limited opportunities to make a capital gain – selling your bonds at a higher price than what you paid for it.
In this case, it may be time to sell some of your bond holdings (if you have any) and rotate the money into other investments – like dividend paying or high-growth stocks.
As mentioned above, bond prices drop when yields go up, and below are two illustrative charts that show this relationship.
On the other hand, if you believe the US economy is still struggling and that this situation will force the Fed to hold off on raising rates, then selling your bonds now may be premature.
In such a situation, bonds might remain a good investment for you.
In either case, the trick is to always hold a diversified portfolio.
From a portfolio diversification perspective, bonds will always hold a valuable place in any portfolio and will always be a good investment.
Just exactly how much weight should bonds have in any portfolio?
This depends on your individual investment circumstances as well as in the (rising or declining) trends of interest rates.
“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”
― Martin Luther King, Jr.
OUT WITH THE SHIT TRASH
https://www.facebook.com/shutdowntrs
Newbie
Fixed incomes like others investments should be some percentage of the portfolio. It is not the best but sometimes is better than leaving your money in the bank doing nothing. If got money property still the best. You look around those rich people who didn't invest in property. Most of them make it even richer thru real estate.
Newbie
Most them issue bonds to repay their loan, expand business, invest real estate.
Junior
Neptune Orient Lines, or NOL, said Saturday that the company and its largest shareholder, Temasek Holdings Pte. Ltd., have entered into exclusive talks with the French container firm until Dec.7
Some private banks have given 50% LTV for NOL 2020 & 2021 . Due to the news the NOL has entered into exclusive talks with the French container firm. Some private banks decided to reduce the LTV from 50% to ZERO. I am not sure whether there will be a margin call for the client who are on leveraging on NOL long
dated 2020 & 2021 bond. If there is a margin call, they will be some forcing selling if Clients cannot top up margin.
As for the NOL short dated bond 4.25% due 2017. Currently no active seller or buyer for this 2017 bond from Bloomberg screen. Need to ask bond dealer for the actual bid & offer price. Last week indicative price to buy is 100.for 2017 NOL bond.
Junior
Just bought NOL 4.25% sgd bond due 26th Apr 2017 @98.50. Not a buy list for this NOL bond but take the risk as it is short dated.
LTV 85% given. YTM 5.4%.
From Fundsupermart comment : The change of control "issuer call" and coupon step-up provides some downside protection
=============================================================================
For the 2017 bonds (NOLSP 4.250% 26Apr2017 Corp (SGD)), the terms of the bonds include the option of an acquirer of NOL (under a change-of-control trigger) to call back the debt of the company; should the acquirer not do so, the 4.25% coupon will actually be stepped up by 150bps to 5.75%, which would provide the bondholder with an additional return over the remaining life of the bond.
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