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Thread: BOND THREAD

  1. #2131
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    Hi,
    I have NOL 9/9/2020 Bonds : was suppose to call last September, but rescheduled to call in September 2016.

    I was told the issuer (NOL) is supposed to call the bond at a pre-determined price when the time comes, is that correct?

    I was also told that bond holders will be paid before the shareholders, is this correct?

    In the event that NOL is acquired by CMA CGM, what will happen to my holdings?

    Thank you.

  2. #2132
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    Quote Originally Posted by gth818 View Post
    Hi,
    I have NOL 9/9/2020 Bonds : was suppose to call last September, but rescheduled to call in September 2016.

    I was told the issuer (NOL) is supposed to call the bond at a pre-determined price when the time comes, is that correct?

    I was also told that bond holders will be paid before the shareholders, is this correct?

    In the event that NOL is acquired by CMA CGM, what will happen to my holdings?

    Thank you.
    you need to examine the issue documents to see the terms.
    In this M&A, the existing shareholders will be paid $1.30 a piece, the bond holders will not be paid.

    The worst scenario :
    1. no payment of coupons
    2. the bond holders paid off using the proceeds from the disposal of the underlying collaterals. The shortfalls will be ranked as unsecured creditors at best in the event of liquidation.

    Or the callable date be delayed further...

    NOL bonds, imho, will be under stress in view of the current situation.
    I didn't check the price, but I'm sure, it's under par.

    The option you might consider is to sell it OTC.

  3. #2133
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    Thank you.

    How to check bond prices other than asking the RM?

  4. #2134
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    Quote Originally Posted by gth818 View Post
    Thank you.

    How to check bond prices other than asking the RM?
    you can check using

    fundsupermart

    http://cbonds.com/emissions/issue/17627

    look like it is listed in SGX
    Last edited by Laguna; 11-02-16 at 13:18.

  5. #2135
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    Quote Originally Posted by cbsh38584 View Post
    Just bought another US$100k of Vendanta resources convertible USD bond 5.5% @94 today.
    YTM12%. LTV70%. borrow USD @1.35%.
    I bought short dated Vedanta Resources bond due July 16 US$300k ave @ 94.15 last Aug15. When it slowly dropped to 81 from Nov15 to early Jan16. It gives me many sleepless night as I am afraid it may suffer the same fate as NOBLE if the commodities crisis prolong for next 6 mths. The long dated Vedanta Resources bond due in 2018/19/20 price are trading between 50-60+.

    On 11 January 2016, when Vedanta Resources announced an offer to repurchase for cash up to $500 million of its outstanding $1.134 billion convertible bonds due July 2016. I see some hope. My offer price to sell to Vedanta Resources is 97.75. Some client offer to sell 91, 93 ,98 etc base on the clients ordinary purchase price. The final result offered to buy back is @0.91. So my offer @ 97.75 is not done. By now, I think my Vedanta Resources short dated bond due Jul 2016 should be safe. The price jump from 81 to 93/94 after Vedanta Resources bought back $200M+ @91.

    Just last week, Vedanta Resources again announced an 2nd offer to repurchase its outstanding $1.134 billion convertible bonds due July 2016. Again
    I offer @97.75. Most of the client offer to sell back to Vedanta Resources @98. Surprisingly, my offer to sell back to them @97.75 is taken up. But not
    the 98. Finally, I am really at ease that my stress for holding Vedanta Resources bond is gone.

    Today, I also cut loss my OLAM perp 7% bond @97.25 for holding 3 yrs +. I bought @100.2. I just want to sleep well by keeping more cash. The Lehman 08/09 crisis still haunt me. Now I only left 2 SGD bond. Short dated NOL bond 2017 & Trafigura.

    2016 & 2017 is a very tough year & hope that these crisis is manageable .According to Fengshui, only the year of DOG which is 2018 will likely to see improvement.

  6. #2136
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    Hi Laguna,
    thank you for your advice.
    the NOL that i m holding is a callable bond, is there no significance in the acquisition?
    Is it not legally binding? can they just set a call date and price and do nothing?

    yes, sadly, it is painfully under par!

  7. #2137
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    Quote Originally Posted by gth818 View Post
    Hi Laguna,
    thank you for your advice.
    the NOL that i m holding is a callable bond, is there no significance in the acquisition?
    Is it not legally binding? can they just set a call date and price and do nothing?

    yes, sadly, it is painfully under par!
    There is no significance in acquisition. The buyer will let it depreciate further.
    It is going to be more complex when they liquidate the underlying collaterals, I think, at current market, may be 30%. There is huge surplus of capacity now

  8. #2138
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    I am still holding Unicredit sgd. Should I be worried?

  9. #2139
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    Quote Originally Posted by cbsh38584 View Post
    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

    European CoCos some of the hardest hit
    =========================
    CoCos are a subordinated class of bonds issued by financial institutions, and come packaged with certain clauses which could entail write-downs or an equity conversion should the bank breach specified capital ratios. Within the CoCo universe of bonds, European CoCos have been some of the worst performers; selected CoCos issued by Deutsche Bank AG, Standard Chartered PLC, Barclays, Credit Suisse, BNP Paribas, Societe Generale SA have lost more than -10% on a year-to-date basis, with Deutsche Bank's CoCos some of the hardest hit


    Deutsche Bank AG - 7.5% Due 4/30/2025
    CETI trigger (%) =5.125
    End Dec15 price was = 97.25
    16th Feb16 price was = 74.75


    Standard Chartered PLC coupon 6.5% due 4/2/2020
    CETI trigger (%) = 7%
    End Dec15 price was = 98+
    16th Feb16 price was = 77.75


    Credit Agricole SA, coupon 7.875% due 1/23/2024
    CETI trigger (%) = 5.125%
    End Dec15 price was = 102+
    16th Feb16 price was = 83



    Credit Suisse Group AG, coupon 6.25% due 12/18/2024
    CETI trigger (%) = 5.125%
    End Dec15 price was = 101+
    16th Feb16 price was = 84


    Credit Suisse Group AG, coupon 7.5% due 12/11/2023
    CETI trigger (%) = 5.125%
    End Dec15 price was = 105+
    16th Feb16 price was = 90



    Societe Generale SA , coupon 8% due 9/29/2025
    CETI trigger (%) = 5.125%
    End Dec15 price was = 102+
    16th Feb16 price was = 88


    BNP Paribas SA, coupon 7.375% due 8/19/2025
    CETI trigger (%) = 5.125%
    End Dec15 price was = 103+
    16th Feb16 price was = 85


    UBS Group AG , coupon 6.875% due 8/7/2025
    CETI trigger (%) = 7%%
    End Dec15 price was = 99+
    16th Feb16 price was = 85

    etc etc.

  10. #2140
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    Hi bro cbsh

    So for the above bond notes you have stated, if hold till maturity, shd be still ok right? After all, the regular payout of the coupons shd be able to cost the loss.

  11. #2141
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    How low can olam bond price go?
    Quote Originally Posted by cbsh38584 View Post
    I bought short dated Vedanta Resources bond due July 16 US$300k ave @ 94.15 last Aug15. When it slowly dropped to 81 from Nov15 to early Jan16. It gives me many sleepless night as I am afraid it may suffer the same fate as NOBLE if the commodities crisis prolong for next 6 mths. The long dated Vedanta Resources bond due in 2018/19/20 price are trading between 50-60+.

    On 11 January 2016, when Vedanta Resources announced an offer to repurchase for cash up to $500 million of its outstanding $1.134 billion convertible bonds due July 2016. I see some hope. My offer price to sell to Vedanta Resources is 97.75. Some client offer to sell 91, 93 ,98 etc base on the clients ordinary purchase price. The final result offered to buy back is @0.91. So my offer @ 97.75 is not done. By now, I think my Vedanta Resources short dated bond due Jul 2016 should be safe. The price jump from 81 to 93/94 after Vedanta Resources bought back $200M+ @91.

    Just last week, Vedanta Resources again announced an 2nd offer to repurchase its outstanding $1.134 billion convertible bonds due July 2016. Again
    I offer @97.75. Most of the client offer to sell back to Vedanta Resources @98. Surprisingly, my offer to sell back to them @97.75 is taken up. But not
    the 98. Finally, I am really at ease that my stress for holding Vedanta Resources bond is gone.

    Today, I also cut loss my OLAM perp 7% bond @97.25 for holding 3 yrs +. I bought @100.2. I just want to sleep well by keeping more cash. The Lehman 08/09 crisis still haunt me. Now I only left 2 SGD bond. Short dated NOL bond 2017 & Trafigura.

    2016 & 2017 is a very tough year & hope that these crisis is manageable .According to Fengshui, only the year of DOG which is 2018 will likely to see improvement.

  12. #2142
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    teddybear is offline Global recession is coming....
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    Better be careful of Olam (in addition to Noble)...........

    Looks like Temasek has seriously overpaid for their stake in Olam and their take-over offer?

    Quote Originally Posted by cbsh38584 View Post
    I bought short dated Vedanta Resources bond due July 16 US$300k ave @ 94.15 last Aug15. When it slowly dropped to 81 from Nov15 to early Jan16. It gives me many sleepless night as I am afraid it may suffer the same fate as NOBLE if the commodities crisis prolong for next 6 mths. The long dated Vedanta Resources bond due in 2018/19/20 price are trading between 50-60+.

    On 11 January 2016, when Vedanta Resources announced an offer to repurchase for cash up to $500 million of its outstanding $1.134 billion convertible bonds due July 2016. I see some hope. My offer price to sell to Vedanta Resources is 97.75. Some client offer to sell 91, 93 ,98 etc base on the clients ordinary purchase price. The final result offered to buy back is @0.91. So my offer @ 97.75 is not done. By now, I think my Vedanta Resources short dated bond due Jul 2016 should be safe. The price jump from 81 to 93/94 after Vedanta Resources bought back $200M+ @91.

    Just last week, Vedanta Resources again announced an 2nd offer to repurchase its outstanding $1.134 billion convertible bonds due July 2016. Again
    I offer @97.75. Most of the client offer to sell back to Vedanta Resources @98. Surprisingly, my offer to sell back to them @97.75 is taken up. But not
    the 98. Finally, I am really at ease that my stress for holding Vedanta Resources bond is gone.

    Today, I also cut loss my OLAM perp 7% bond @97.25 for holding 3 yrs +. I bought @100.2. I just want to sleep well by keeping more cash. The Lehman 08/09 crisis still haunt me. Now I only left 2 SGD bond. Short dated NOL bond 2017 & Trafigura.

    2016 & 2017 is a very tough year & hope that these crisis is manageable .According to Fengshui, only the year of DOG which is 2018 will likely to see improvement.

  13. #2143
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    last week one major HY default: Mongolian Mining. quite a large issue (600m I believe). any one affected ? this one was issued at par, very popular in the PB scene 3yrs ago.

  14. #2144
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    Quote Originally Posted by amk View Post
    last week one major HY default: Mongolian Mining. quite a large issue (600m I believe). any one affected ? this one was issued at par, very popular in the PB scene 3yrs ago.
    I have been paging for Bro cbsh.. just wonder what happened to him...?

  15. #2145
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    My parent's Indonesia maid stole $15k cash from my father "locked" cabinet in Feb15.
    Told my stubborn father (85) not to leave cash. But refuse to listen.

    Stress out by the going to police + maid agency a few times. Now helping to take care
    of my mum (parkinson) while waiting for new maid to come (1st Apr). After her prison
    sentence, I thought of telling all her friends about the stealing through her facebook.

    =====================================================
    2016 will be a very volatile year. So I will still concentrate on fixed income but mostly short
    dated. Most of the Chinese developers bond did very well in the last 5 yrs.
    Tgt income $100k - $120k/yr (ZERO leveraging) instead of >$220k (with leveraging)


    I will apply Aspial 5.3% amt $2k to see what will happen in the next four yrs. This company
    does not have SAFETY of margin (CASH FLOW problem) in the event of another crisis.


    As for stock, let make investing simple. Patiently wait for the FEAR to come back again,
    Again says is easy. Execution is the most difficult part. But at least, U dont buy during
    the optimise time (herd instinct) when the price is HIGH.


    Lastly, we need to watchout for the USA presidential election. If DONALD trump will have a
    chance to win. It maybe bad for the world stock mkt. I do not know about the British Euro exit.
    Another volatiity for this BRexit in Jun16 (referendum).

  16. #2146
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    Thank cbsh for sharing, is it worth the risk to buy those local bonds going to mature in fews mths time at $80? Once redeem we have gain 20% and yield unless it default.

  17. #2147
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    Quote Originally Posted by cbsh38584 View Post
    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


    I am new in bond investing (started in 2010). I am no expert. Pls get your knowledgable relationship manager to explain to U on fixed income investment.

    Fixed income is still one of the best investment since I started in 2010.

    Between jan16 to early Mar16, I made mistakes by selling, taking profit as well as
    cut loss to most of my bonds due to fear. After selling, bond portfolio holding less
    than 1m. Later, I realise that I maybe too emotional. Eg. Bought BHP 6.25% @93.
    Sold @93.25% within week. Now 102. I immediately buy back to meet my tgt of 100k to
    120k income (without leveraging). Then I refrain from watching -ve news for many
    weeks. Almost 4x per week at Garden by the bay (2-3 hrs) to find peace there. I am
    also busy with my maid issues.


    China central real estate 6.5% @97.5

    Thailand PTT USD 4.875% @93.5

    FCL 5% @98

    Vedanate repurchased 2nd time (Mar16) in cash bonds worth $500 million from bondholder @98.
    So I sold @98 to Vedanate. I took the risk to buy back @96 within days when Moody downgrade
    to B2. It drop as low as 94.Now 99.5 as they have to intention to repurchase back again (3rd time)
    which the bond is due in Jul16.

    French ultilty bond @87

  18. #2148
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    When govt started to implement the cooling measure in early 2011. Many still believe the property
    will still have a potential upside. Alot of people rush to buy 1-2 bedder or studio hoping to hedge against
    inflation or even capital gain in the next 3-5 yrs.

    I did suggest in 2011 to the potential property investors thinking of buying 1-2 bedder or studio bewteen $500k to $700k to instead buy a safe corporate bond like Cheung Kong SGD perp 5.125% (callable 2017. If not call due 2049) or Sing post 4%.

    Cheung Kong SGD perp bond 5.125% IPO on Sept 2011. (Li ka Sing ,Asia no1 HK tycoon) . Stock
    listed in HK. After 18 yrs , you will have collected $250k of coupon (5.125%). No ppty & rental tax,
    no renovation issue , no tenant issues, no increasing high maintenance fee, no agent fee for renewal , high mortgage loan in near future etc etc. Cheung Kong perp bond price still around 100.

    As for those bought 1 or 2 bedder or studio in 2011 to 2012. They are likely to be a super long term investors.
    The previous ppty bear last >10 yrs (from 1997 to 2011). This time around will be completely different as SG
    economy are in a very mature phase. Growth will be very low for many yrs to come. I believe this ppty investment will not likely to match the Cheung kong SGD perp 5.125% return after 18 yrs.

  19. #2149
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    teddybear is offline Global recession is coming....
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    Well, despite all that in the news, Singapore Government sounding warning of low growth, but it seems people just don't believe them........

    People still want to believe that their OCR property prices will continue to rise and rise with low economic growth (meaning low pay rise), low foreigners' intake into Singapore (vs previous very high foreigners' intake which is the main cause of OCR property price rise), aging population and high death rate (due to age) and smaller worker force (hence smaller GDP economy) in near future.............
    Unbelievable!!!!!

    This is a psychological problem, in that they are still extrapolating the past into the future (without considering all the differences happening), and partially because they have no financial and investment knowledge, and they only know about investing in properties and nothing else............


    Quote Originally Posted by cbsh38584 View Post
    When govt started to implement the cooling measure in early 2011. Many still believe the property
    will still have a potential upside. Alot of people rush to buy 1-2 bedder or studio hoping to hedge against
    inflation or even capital gain in the next 3-5 yrs.

    I did suggest in 2011 to the potential property investors thinking of buying 1-2 bedder or studio bewteen $500k to $700k to instead buy a safe corporate bond like Cheung Kong SGD perp 5.125% (callable 2017. If not call due 2049) or Sing post 4%.

    Cheung Kong SGD perp bond 5.125% IPO on Sept 2011. (Li ka Sing ,Asia no1 HK tycoon) . Stock
    listed in HK. After 18 yrs , you will have collected $250k of coupon (5.125%). No ppty & rental tax,
    no renovation issue , no tenant issues, no increasing high maintenance fee, no agent fee for renewal , high mortgage loan in near future etc etc. Cheung Kong perp bond price still around 100.

    As for those bought 1 or 2 bedder or studio in 2011 to 2012. They are likely to be a super long term investors.
    The previous ppty bear last >10 yrs (from 1997 to 2011). This time around will be completely different as SG
    economy are in a very mature phase. Growth will be very low for many yrs to come. I believe this ppty investment will not likely to match the Cheung kong SGD perp 5.125% return after 18 yrs.

  20. #2150
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    Agree with both cbsh and Teddybear that bond is still the best investment instrument since late 2011.

    I have switched to bonds since late 2011. I have been suggesting to people in this forum not to be property heavy since then but always been scolded by those vested in property.

    On the hindsight, the average investors only know how to buy property because almost everyone own a HDB flat to start with.

    Agree that property going forward should only be part of your investment portfolio diversification. It is unwise to buy property now (in fact since 2011) and hoping for the best.

  21. #2151
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    Bro cbsh38584, you have a good strategy. I am keen to find out more about bonds before I commit, because based on stocks, 8% per annum is quite easily achieved for me.

    But property buyers of specific types also have a comparable strategy.

    Let's use your 1-2BR at 600K for example.

    Right now we are experiencing very strong downward resistance plus upward resistance due to financing regulations, so let's assume in this scenario prices stay at 600K for 18 years (no upside, no downside).

    Assuming a buyer who buys into this for rental puts in 25% downpayment for an almost TOP unit. Inclusive of Buyer Stamp Duty and miscellaneous fees, he puts in $168,000. Let's say he also furnishes it up with $5,000 furnishings, making the total sum paid $173,000.

    Let me just place your numbers down for certainty. Please correct me if wrong. If I place $240,000 in a bond with 5.125%, I should collect $221,400 interests (non-compounded) or $362,552 (compounded) over 18 years. Which rate should I refer to for bonds?

    Now assuming the buyer manages to rent out in a poor market $1,800 per month, and 2 months are used for all kinds of property payments, giving an annual net receipt of $18,000. Based on a 1.7% interest rate currently on a 30 year loan, in the first year (taking the 6th month payment), $965 goes into repaying his principal and $630 is for interest payment to the bank (monthly mortgage of $1595). Inclusive of maintenance fees ($200pm), the buyer puts in a further first year "loss" of $3600. In this context, the first year "gain" via the property mortgage paid is $11,580, while the net investment is $176,600. The % gain based on first year rental is 6.5%.

    Assuming rents do not increase in 18 years by 2034 (a very unrealistic scenario), and interest rates do not increase (another unrealistic scenario), in the 210th month in the 18th year, the "gain" that is paid into his mortgage is $1290 versus an interest of $307. The "gain" on the 18th year will be roughly $15,480 based on his input of $237,800 ($173,000+$3600 loss every for 18 years), again 6.5%. Total rent deposited into the property mortgage is roughly $240,000 in 18 years with a mortgage half paid (remaining loan of $208,000), and total money out of pocket (paid by instalment) is $240,000. Part of the rent collected used to pay expenses.

    Note that if interest rates do increase, I am of the belief that inflation will increase and capital prices will also gain as well. But it is too complicated to calculate in my simplistic model.

    A compounded steady bond will perhaps gain more than a property in 18 years, but a non-compounded one will not beat a laggish 18 years of property. There is also the probability of non-payment or losses of bonds that is beyond a buyer's control. There is also the potential for significant capital growth of property which might not be evident these few years. Lastly, if the buyer manages to pay up his mortgage in 30 years, his net position will be a fully paid condo with lease ranging from 60 years to FH, and a continued $18,000 annually (by today's prices).

    My calculations are purely based on the amount out of pocket every month. Now I understand what Arcachon means by fixed savings plan.

    Quote Originally Posted by cbsh38584 View Post
    When govt started to implement the cooling measure in early 2011. Many still believe the property will still have a potential upside. Alot of people rush to buy 1-2 bedder or studio hoping to hedge against inflation or even capital gain in the next 3-5 yrs.

    I did suggest in 2011 to the potential property investors thinking of buying 1-2 bedder or studio bewteen $500k to $700k to instead buy a safe corporate bond like Cheung Kong SGD perp 5.125% (callable 2017. If not call due 2049) or Sing post 4%.

    Cheung Kong SGD perp bond 5.125% IPO on Sept 2011. (Li ka Sing ,Asia no1 HK tycoon) . Stock listed in HK. After 18 yrs , you will have collected $250k of coupon (5.125%). No ppty & rental tax, no renovation issue , no tenant issues, no increasing high maintenance fee, no agent fee for renewal , high mortgage loan in near future etc etc. Cheung Kong perp bond price still around 100.

    As for those bought 1 or 2 bedder or studio in 2011 to 2012. They are likely to be a super long term investors.
    The previous ppty bear last >10 yrs (from 1997 to 2011). This time around will be completely different as SG economy are in a very mature phase. Growth will be very low for many yrs to come. I believe this ppty investment will not likely to match the Cheung kong SGD perp 5.125% return after 18 yrs.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  22. #2152
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    500K property with 30% dp, rented for 20K per year is 13% yield. Paid for by tenant.

  23. #2153
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    teddybear is offline Global recession is coming....
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    Where on earth you find 13% net yield for Singapore private properties?
    You must be dreaming!


    Quote Originally Posted by indomie View Post
    500K property with 30% dp, rented for 20K per year is 13% yield. Paid for by tenant.

  24. #2154
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    Quote Originally Posted by indomie View Post
    500K property with 30% dp, rented for 20K per year is 13% yield. Paid for by tenant.
    Minus off the interest paid to bank, only about 6.5% to 8%. Which is still solid.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Quote Originally Posted by Kelonguni View Post
    Minus off the interest paid to bank, only about 6.5% to 8%. Which is still solid.
    it is quite safe to use the declared net rental income which we declare to iras right? already nett everything divide by downpayment + stamp duty? very exciting, even for big units can get at least 5% yield.

  26. #2156
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    Not too sure. Anyway have factored in 2 months rent to pay for all these. Just an academic calculation. IRAS whatever they ask I just pay. So far reasonable. Also got some tax deduction of income through interest payment as well.

    Quote Originally Posted by bargain hunter View Post
    it is quite safe to use the declared net rental income which we declare to iras right? already nett everything divide by downpayment + stamp duty? very exciting, even for big units can get at least 5% yield.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  27. #2157
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    If you buy a 1 mil property, downpayment say 400k(40%) - please also factor in stamp duty, etc... You take a loan of 600k over 30 years. After 30 years, your tenant would have paid for the balance of the house. Yes - 600k. After 30 years, you will be able to generate positive cash flow just in time for your retirement.

    If you start at age 45, your tenure will be shorter....

    There are a few people who are very negative w property, Why???? Most probably, they don't have investment property/properties. If they have, they would be reaping the rewards.

    Do you believe in inflation????

    If no, no need to buy property.

    When there are people who advocate buying properties, they are deemed to be silly and vested and trying to influence the market. Very interesting concept.

    Choose wisely. The decision affects your future.

  28. #2158
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    Welcome back, Master Shifu.

    Quote Originally Posted by chestnut View Post
    If you buy a 1 mil property, downpayment say 400k(40%) - please also factor in stamp duty, etc... You take a loan of 600k over 30 years. After 30 years, your tenant would have paid for the balance of the house. Yes - 600k. After 30 years, you will be able to generate positive cash flow just in time for your retirement.

    If you start at age 45, your tenure will be shorter....

    There are a few people who are very negative w property, Why???? Most probably, they don't have investment property/properties. If they have, they would be reaping the rewards.

    Do you believe in inflation????

    If no, no need to buy property.

    When there are people who advocate buying properties, they are deemed to be silly and vested and trying to influence the market. Very interesting concept.

    Choose wisely. The decision affects your future.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  29. #2159
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    If the government did not intervene with all the cooling measures, what would have happened with our property market????

    1. Would it overhear and continue its upward trend? or
    2. Would it be neutral? or
    3. Would it go downwards?

    Answer the question and it will lead you somewhere.

    Why did the government intervene???? Was the pricing on a runaway train????

    When you buy an investment property, please think long term. 30 years. Maybe 20 years. If you think 2 years, you are better off buying stocks, bonds, etc.....

    Property investment is similar to bonds.... Why???? If you did not dabble with bonds, you are hesitant.... You will have doubts.... You will not know the workings of this particular investment....

    Ask Kelonguni, is he happy w his property investment???

    Ask cbsh, is he happy w his bond investment????

    Both dabbled in it and understand the beauty in its own instrument...

    Which is a better investment????? It's all about what you want to achieve....

  30. #2160
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    果然是师父。

    Yah actually both my rental units the yields are even higher than the numbers I quoted here.

    But in view of the so called poor rental market, I have adjusted them downwards. Many can get even better rates!

    Oops sorry I forgot we are in recession. Actually very cham...

    Quote Originally Posted by chestnut View Post
    If the government did not intervene with all the cooling measures, what would have happened with our property market????

    1. Would it overhear and continue its upward trend? or
    2. Would it be neutral? or
    3. Would it go downwards?

    Answer the question and it will lead you somewhere.

    Why did the government intervene???? Was the pricing on a runaway train????

    When you buy an investment property, please think long term. 30 years. Maybe 20 years. If you think 2 years, you are better off buying stocks, bonds, etc.....

    Property investment is similar to bonds.... Why???? If you did not dabble with bonds, you are hesitant.... You will have doubts.... You will not know the workings of this particular investment....

    Ask Kelonguni, is he happy w his property investment???

    Ask cbsh, is he happy w his bond investment????

    Both dabbled in it and understand the beauty in its own instrument...

    Which is a better investment????? It's all about what you want to achieve....
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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