Newbie
Hi chestnut
Thanks for coming in.
i like to specialize in property but as u know, I can't buy.
So the funds need to be put somewhere to grow but in am not savvy in this sort of financial instruments, very scared to lose all too.
Stock is ok but volatile. Bonds still learning but so far hv not bot anything yet except for ocbc preferential.
How how.
Junior
I just *love* the name of this product.Originally Posted by Werther
"callable",
"kick in" option
"variable maturity"
"worst of".
Do you understand any of these terms ? If not, you should not touch at all.
This is by and large a put, that you hold all the downside risk, and has a tiny upside profit. S&P is at all time high, of course banks want to buy puts from you. Your 6% is p.a. A puny premium for a large risk.
Newbie
Exactly, the terminologies are quite a mouthful on its own.I just *love* the name of this product.
"callable",
"kick in" option
"variable maturity"
"worst of".
Do you understand any of these terms ? If not, you should not touch at all.
This is by and large a put, that you hold all the downside risk, and has a tiny upside profit. S&P is at all time high, of course banks want to buy puts from you. Your 6% is p.a. A puny premium for a large risk.
So it's selling puts under low vols environment eh? Not wise at all.
Newbie
Hi banana and AMK
I hv no clue what is this but my friend invested $500k... Interest payable monthly, she said very good investment....
Junior
Rule no 1. Dont touch something you dont know. If you do touch it, pray that you have luck on your side....Hi banana and AMK
I hv no clue what is this but my friend invested $500k... Interest payable monthly, she said very good investment....
When in jungle, how to survive??? To see if the plant is poisonous, you rub the plant against your skin to see if you develop rashes... you need to know skills..
You need to start looking at a particular investment and know it almost inside out.... than you know the effects.... and whether you need to pull out or stay put in the investment should an event happen (or about to happen).... If you dont know the effects, how to make a decision????
Say green, amber, red... You know that if light turn from green to amber, you need to slow down to stop as it turns red... imagine if you dont know red is for stopping, what will happen??? So before driving, please do your highway code.... If not how to drive?????
Newbie
Werther, it sounds complex and I don't like products especially when they get too complex. One who understands the complexities would probably be able to undertake the same position without engaging in a structure, and for this reason, there has to be quite a chuck here contributed to structurer's fees. Stick to instruments, stay away from products where possible, product is a dirty word in my books where may sticks have short ends.Hi banana and AMK
I hv no clue what is this but my friend invested $500k... Interest payable monthly, she said very good investment....
Junior
Rule No. 1 of structured products: they are NOT fixed income, so dun view it as "interest payable monthly".
you are getting paid a premium, for taking the downside risk of shares. This premium, at best is 6% of your notional, that is when it lasted for a year.
Imagine next week S&P had a 10% correction, your product gets knocked out ("variable maturity"), you lost 10% of the notional ("worst of"), the product terminated, you only get paid 6% p.a. but for 1 week duration only. That's 0.12%. Imagine you get paid such a tiny premium for taking such a high risk.
All these "fixed coupon" structured products allow banks to pay you premium in installments ! And when it knocks out, the bank even save on the premium!
Such products today usually have much higher premium. When banks sell to you, they merely take a cut from the house that make these products. I suspect the actual premium for this product is >10%, the bank just take a cut 3-4% and pass it to you.
Junior
in simple English it means: if you have that much risk appetite, just go buy the underlying shares directly ! no need to buy the structure "to gain exposure of it" and grossly overpaid for it.
btw to be fair, some structured products are quite nice. you have to be in this trade/field to spot it though.
Newbie
Thanks all for your kind advices.
Think I need to get away for a holiday, to walk away from anyhow buy.. cloudy mindset.
Junior
Read this ELN from UOB. Do you understand????Thanks all for your kind advices.
Think I need to get away for a holiday, to walk away from anyhow buy.. cloudy mindset.
http://www.uob.com.sg/corporate/corp...ked_notes.html
I did ELN for Citibank in the past..Guess what??? i took the stocks of Citibank @ US$20... and guess what, it dropped to US$1 all time low... Today it is about US$47 after reverse split.... Which means it is US$4.7 (still way below my buy price of US$20)... But I was lucky, I went in again @ US$1.5 to average down my holdings... Thank goodness I am in the black !!!! hahahaha
Dont touch this unless you know what you are doing....
When you play stocks, you must also have cash set aside in case there is a rights issue..... You must go in with your eyes wide open...
I hope it helps.... Cheers and enjoy your holiday
Newbie
Absolutely hit the spot there on the translation
You have a point there, familiarity has it's perks, unfortunately for me the somewhat exotic nature of structures often makes it difficult for me to appreciate with clarity and so as a result will pass on them as quickly as they come in.
Newbie
Thanks to all for yr sound advices. . Back to Bond... :-)
Junior
A new issue out today or MONDAY.
KrisEnergy SGD bond
Around 6.25%
3 yrs
31% owned by Keppel corp.
IPO in 2009. I think the only good point is that it is 31% own by Keppel corp.
More for high risk investors.
rdgs,
Vic
Junior
A fundamental principle of bond investing is that market interest rates and bond prices generally move in opposite directions.
When market interest rates rise, prices of fixed-rate bonds fall.
This phenomenon is known as interest rate risk
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Lower fixed-rate bond coupon rates (eg 2%) higher interest rate risk
Higher fixed-rate bond coupon rates (eg 5%) lower interest rate risk
For eg, one bond that has a coupon rate of 2% while another bond has a coupon rate of 5%. All other features of the two bonds are the same (credit risk etc). If market interest rates rise, then the price of the bond with the 2% coupon rate will fall more than that of the bond with the 5% coupon rate.
===============================================
Longer maturity (eg 2019) higher interest rate risk
Shorter maturity (eg 2016) lower interest rate risk
The longer the bond’s maturity, the greater the risk that the bond’s value could be impacted by changing interest rates prior to maturity, which may have a negative effect on the price of the bond. Therefore, bonds with longer maturities generally have higher interest rate risk than similar bonds with shorter maturities.
==============================================
Longer maturity(eg 2019) higher interest rate risk higher coupon rate (6%)
Shorter maturity (eg 2016) lower interest rate risk lower coupon rate (3%)
To compensate investors for this interest rate risk, long-term bonds generally offer higher coupon rates than short-term bonds of the same credit quality
==============================================
If you intend to hold a bond to maturity, the day-to-day fluctuations in the bond’s price may not be as important to you. The bond’s price may change, but you will be paid the stated interest rate, as well as the face value of the bond, upon maturity
Junior
Risk of investing in Bonds
1 Credit Risk
2. Interest rate risk
3.Liquidity risk
4. 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
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$50M- 300M?) (>US$500m more liquid ?)
Establishing a fair price & price comparisons 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)
Aud/SGD 1.23 (16th May13)
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)A 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
Junior
KRISENERGY LTD SGD 3Y SENIOR NOTES
Issuer: KrisEnergy Ltd.
Structure: Fixed Rate Senior Unsecured Notes
Issuer Rating: Unrated
Issue Rating: Unrated
Format: Regulation S; Singapore (Sections 274 and 275 of the Securities and Futures Act (Cap. 289)); Issuance off SGD 500 Million Multicurrency Medium Term Note Programme
Tenor: 3 years
FINAL ORDERBOOK : 8X oversubscribe
FINAL GUIDANCE: 6.25%
EXPECTED ISSUE SIZE: SGD 125 – 130MM
BOOK RUNNER : STD CHART & HSBC
Main good point is that Keppel Corp’s 31.4% shareholding.
STD chart LTV zero.
CS LTV 65%.
HSBC ?
I have applied S$250k but chances almost zero due to 8 times oversubscribe.
Junior
Zero allocation. Price has moved up. To buy is >101.
Newbie
seems like every IPO all subscribed.. SG still very rich..
Junior
New IPO Trikomsel (Indonesia 4th largest telcom) SGD 7.875% bond (due in 2017) under water on the 1st day of trading.Price now 98-98.8. Did not apply for it. S'porean not interested in unfamiliar Indonesia name. Not liquid in the OTC mkt.
Kris Energy performs quite good on the 1st day of trading. It is due to Keppel corp 31% stake in Kris Energy. If Keppel corp will to reduce the stake to below 31%. There is a clause allows the bond investor to sell back to Kris energy @101.
Most of secondary market junk bond price has moved up since 2 weeks ago. So only can buy new IPO short dated bond with good CREDIT or familiar BRAND NAME in it.
Citic pacific (58% own by Chinese gov) 8.625% perp USD bond (US$200k - LTV 60%) bought @94.75. Now @ 111 . Almost 17% capital gain within a year + 8.625% coupon every yr.
I miss out Gazprom (gas producer. Majorities own by Russian gov) when the US/EURO announced sanction on Russian gov. Weeks later, it shoot up due to the big gas contract signed b/w Chinese & Russian gov.
Newbie
Aspial issued a 5 year bond at low 5+% today.
DBS Treasures offered their client at 100.40. DBS Private Client offered their clients at 100.00. Can like that one meh?
Newbie
Hi starry..just to confirm again..for the dbs treasures customer (non private client)..there is no bond financing.?Aspial issued a 5 year bond at low 5+% today.
DBS Treasures offered their client at 100.40. DBS Private Client offered their clients at 100.00. Can like that one meh?
Junior
It is the Same at SC priority banking. But I believe it can be nego to 100.2. I managed to reduce the custodian fee by 50% when I showed my banker that my trades (in/out) with them is quite active.Aspial issued a 5 year bond at low 5+% today.
DBS Treasures offered their client at 100.40. DBS Private Client offered their clients at 100.00. Can like that one meh?
Aspial - high or low CREDIT RISK ? This is very important.When crisis strikes, those with High CREDIT risk combine with low liquidity (small issued size) will be hit badly. I don't feel comfortable with ASPIAL.
Junior
Previous Aspial bond was a hot potato. Many made money from it. I suspect this one will be hot too
Newbie
Yes its possible to have them offer it at 100.40 nett, when broken up, it will be 100.00 for bond and 0.40 for commission. Since Issue FaceValue price is transparent at 100.00, the above can be implied or forced out from the horses mouth if necessary. Banks have a thing for billing on final nett figure, so you would have to ask, know, or imply. It's easier in this case when issue is at par FV of 100.00 and ignoring rebates.Aspial issued a 5 year bond at low 5+% today.
DBS Treasures offered their client at 100.40. DBS Private Client offered their clients at 100.00. Can like that one meh?
At UOB PV Retail previously, I've paid 100.20 for IPO on 100.00 FV Par issue. They told me openly they expect min. 20 cents for comms. To figure the truth, you have to be inside or an insider to know for sure.
Some has explained that there is a floor figure which they need to charge, typically 0.20 for comms. Others have told me they can do it without comms at 100.00 FV for IPO. Common explanations are they their bond desk demands a spread/fee for transacting or the house imposed a minimum fee rule for executing bonds, regardless IPO or secondary. Its all down to either or both of these elements:
1. Platform limitations
2. RM's appetite
Junior
Definition of 'Credit Risk'
The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt. Investors are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation
The higher the perceived credit risk, the higher the rate of interest that investors will demand for lending their capital. Credit risks are calculated based on the borrowers' overall ability to repay. This calculation includes the borrowers' collateral assets, revenue-generating ability and taxing authority
=============================================
China S-chip listed SGX stock , Eratat bond default ?
S-chip - Eratat: Statutory Demand From Bondholder.
04 Jun 2014 13:03
Eratat Lifestyle Limited has been served a statutory demand by the solicitors acting for the Bondholder, arising from the Company's failure to pay the second coupon interest under the Bonds as well as failure by the Company to pay the redemption amount for all principal and interest due under the Bonds pursuant to the Acceleration Notice. The Company has 21 days from 2 June 2014, which was the date of the Demand, to repay the aforesaid outstanding, failing which the Company shall be deemed to be unable to pay its debts and the Bondholder shall be entitled to rely on any statutory presumptions of insolvency arising therefrom and take all necessary steps, including liquidating the Company...
Source: ShareInvestor Express
Newbie
Aspial's boss looks like he is getting ready for a takeover fight with the maj shareholders of LC Global Devt. Don't know how that affects what he might do with his shares in Aspial (e.g. pledge to get financing?), and hence the impact on Aspial.
SLee, that's indeed my understanding and experience.
Newbie
B55,
Thanks for this. Enlightening words.
When I was with DBS Treasures, the "retail price" for comm was indeed .4%, but the very moment I asked, the RM said he can bring it down to 0.2% or 0.25%. Most of my DBST IPO bonds were thus at 100.2, with 1 at 100.15 because the bank got a larger discount from the issuer (Oxley).
Friend's sister who is a private banker with 1 of the big outfits said that PB "retail price" comm is easily 1%, and it is surprising how many clients actually just pony up the comm without question.
Question: so does the individual RM get to decide what (additional) comm over the minimum comm rate to charge? If yes, it means the additional money goes into the banker's pockets?
Newbie
Hi Starry,
Yes, RM's whether in retail or PB gets to decide how much to offer you on the comms. A % of the comms contributes to the RM's income directly with the remaining going to the house. Therefore no 2 RM's from the same house might make you the same offer, just like we all don't have 2 identical friends. At retail platform, the comms would usually affect the RMs monthly take home(base+comms), and plausibly in almost all PB level, they take home only a base on monthly basis but the comms gets pooled together and is shared by a team as part of annual bonus of sorts.
So whether directly or indirectly, the comms charged benefits the RM's income. 1% is overkill, even 0.5% is not considerable by my expectations, although I've heard a number of times RM's gloating over their ability to charge 3% on some trades. I sense guilt, but I also sense opportunistic greed when exorbitant fees gets slapped on those who should had known better.
Junior
European central bank cut deposit rate into -ve for the 1st time. Going to Euro will soon be even cheaper. In 2007, Euro/SGD was 2.08. Today 1.71. The sad thing is that our SGD interest rate may not go up anytime soon.
The poor will become even poorer & the mediocre will become poor if nothing is being done to the way they think. if the poor & Mediocre which did nothing to the current life as they assumed that everything will be fine & they follow the old way of thinking. Save their earning & keep in the bank. Their money in the bank will be eroded by the high inflation.
Our government, Temasek is seriously thinking of offering RETAIL BOND to offer better return that bank deposit rate.
For those who decided to take higher risk to go into equity .U know need know that the whole world is in manipulation. Manipulating everything from currency to commodity to stock to Government fake data , fraud accounting etc. So if U decide to take a higher risk to buy stock. You really need to be extra careful. Buy when there is fear in the market. Just be patience.
GREED KILLS
===========================================
Fullerton Fund Mgmt, a unit of SG state investor Temasek Holdings.
Fullerton current portfolio average yield to maturity is est 3-4% and
Duration is 3.3 years. It is important to consider the portfolio yield together with the duration risk.
Fullerton has done a quite a good job of keeping the duration risk Relatively low. They actively manage this..
Fullerton Income fund.
Price : SGD 1.049
52 week low? SGD 1.02
52 week high? SGD 1.05
Target dividend pay-out is 3%.
Current div yield is est 4%
Annual Expense Ratio *1.11% (as of September 30, 2013)
Expense ratio is the fee charged by the investment company to manage the funds of investors.Expense ratio - .the lower the better.
(Other bond fund expense ration between (1.1 to 1.8)
Fund inception Since 2012
>5% annual returns since inception
Sharpe ratio - represents risk return reward, the higher the better. In the case of Fullerton income bond fund, for every 1 point of risk, you get 1.97 point of return. Anything above 1 is very good.
rdgs,
Vic
Junior
GIC bets big on Chinese debt (BOND)
SINGAPORE sovereign wealth fund GIC is making waves in the Asian debt markets with a series of unusually big investments in bonds from China.
According to market sources, in recent weeks, GIC has bought US$700m of unrated 4.7 per cent bonds due 2019 from computer maker Lenovo, a US$400m 2019 private placement from property developer Vanke, and a HK$2 billion (US$258 million) 3.2 per cent 2020 note from internet group Tencent Holdings.
Adding to the sudden increase in activity, the fund is said to have been behind the anchor order for the US$350 million reopening of China Resources Land, as well as a big buyer in several other transactions.
The investments in unrated bonds and private placements mark a newly aggressive approach from GIC. It also contrasts with the liquidity-driven investment philosophy of other sovereign wealth funds, which typically prefer to invest taxpayers' money in high-rated and well-traded securities. "A US$700m order for an unrated bond is a big thing for a sovereign wealth fund," said one banker.
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