BOND THREAD

[cbsh38584]

Temasek Holdings is exploring ways to offer bonds to retail investors in Singapore. It will provide an alternative investment opportunity for those seeking stable returns with lower risks.

On 22nd May13, Benanke told Congress the Fed may cut the pace of bond purchases at the next few meetings if policy makers see indications of sustained economic growth.

His statement later caused a sell down in Reits & Bond (investment grade, Perp & junk ) was down between 2 to 10% in late May13 to June13.
Reits counters were also down > 10%. It pushed the 10 yrs treasury yield from <2% to as high as 2.9% in Jun/july13.

Six months later (Jan14), Surprisingly most of Bond recovered to the May 2013 price despite the 10 treasury is @2.9% in Jan14 . But the reits counters is still down > 10% & did not recover to the May 2013 price.

I bought Chinese developer, Shui On SGD bond 8% (Due Jan 2015. Amt SGD 250k. LTV 60%) in Jan 2012@ 100. Surprisingly, I manage to sell @103.9 on 13th Jan 2014. A total profit of SGD$50k holding for 2 yrs using 100k intial capital as LTV 60%). I switch out to another Chinese developer property counter USD Bond buying @98 (LTV 65%)which is callable in 2016 & due in 2018.

With the DBS mortgage with 1.88% p.a. fixed for 5 whole years. I think Short dated bond WITHOUT leverage can be part of your small percentage investment portfolio.

I am more of a risker taker. But I do not want to expose myself more into equites. So I decide to buy bond with LEVERAGING to get a better return. It has been a good year for my bond in 2011(leveraging), 2012 (using max leveraging) & 2013 (reducing leveraging) . Hopefully, 2014 will be also a good year for bond with less leveraging. By 2016, I hope to earn enough $$$ to buy my next property.

Right now, I hold 80% in Bond , The rest is in Red chip index stock with a dividend yield 2.6%. (stock 18% down). Zero SG stock, I will start to use my CPF $$$ again to buy SG stock when the FEAR comes again.


rdgs,
vic

[bargain hunter]

Hi vic,

is it ok to disclose what were the total returns for the years 2011, 2012 and 2013? ie leveraged returns after lessing off interest costs.

i am very curious as i have not much of a bond investor.

Temasek Holdings is exploring ways to offer bonds to retail investors in Singapore. It will provide an alternative investment opportunity for those seeking stable returns with lower risks.

On 22nd May13, Benanke told Congress the Fed may cut the pace of bond purchases at the next few meetings if policy makers see indications of sustained economic growth.

His statement later caused a sell down in Reits & Bond (investment grade, Perp & junk ) was down between 2 to 10% in late May13 to June13.
Reits counters were also down > 10%. It pushed the 10 yrs treasury yield from <2% to as high as 2.9% in Jun/july13.

Six months later (Jan14), Surprisingly most of Bond recovered to the May 2013 price despite the 10 treasury is @2.9% in Jan14 . But the reits counters is still down > 10% & did not recover to the May 2013 price.

I bought Chinese developer, Shui On SGD bond 8% (Due Jan 2015. Amt SGD 250k. LTV 60%) in Jan 2012@ 100. Surprisingly, I manage to sell @103.9 on 13th Jan 2014. A total profit of SGD$50k holding for 2 yrs using 100k intial capital as LTV 60%). I switch out to another Chinese developer property counter USD Bond buying @98 (LTV 65%)which is callable in 2016 & due in 2018.

With the DBS mortgage with 1.88% p.a. fixed for 5 whole years. I think Short dated bond WITHOUT leverage can be part of your small percentage investment portfolio.

I am more of a risker taker. But I do not want to expose myself more into equites. So I decide to buy bond with LEVERAGING to get a better return. It has been a good year for my bond in 2011(leveraging), 2012 (using max leveraging) & 2013 (reducing leveraging) . Hopefully, 2014 will be also a good year for bond with less leveraging. By 2016, I hope to earn enough $$$ to buy my next property.

Right now, I hold 80% in Bond , The rest is in Red chip index stock with a dividend yield 2.6%. (stock 18% down). Zero SG stock, I will start to use my CPF $$$ again to buy SG stock when the FEAR comes again.


rdgs,
vic

[cbsh38584]

Hi vic,

is it ok to disclose what were the total returns for the years 2011, 2012 and 2013? ie leveraged returns after lessing off interest costs.

i am very curious as i have not much of a bond investor.

Started to invest in Bond only in 2010 using equity loan buying blue chip bond like DBS pref share bond , Capland & capital com trust convertible bond. Have sold & switched to higher risk bond with high yield 5% to 10%.

Net return minus borrowing cost ave 1.1% & Custodian fee 0.25%
=========================================
2010 = 30k

2011 = 70k (coupon + bond sold off with capital gain)

2012 = 140k (coupon + Bond sold off with capital gain)

2013 = 260k (Coupon + Bond sold off with capital gain)

2014 = est 190k (only coupon - Current bond holding est $3m)
Not much capital gain in 2014.

2015 = est 180k (only coupon)

2016 = est 180k (only coupon)

Holding junk bond is very risky. In 2011, the Greece crisis caused one of my Junk bond , Chinese developer Evergrande RMB bond (7.5%) dropped from 96 below 60. While capland bond only drops less than 10%. After the crisis, Evergrande bond price move up to 91.

In June12, Muddy water claimed that there is a massive fraud and imminent insolvency at Evergrande . The bond price was sold off from 91 to to 72. I manage to ride through the crisis & sold @ 101 in Apr 13. The evergrande bond will mature this year on 19th Jan14.

In Nov12, Muddy waters claimed that Olam runs a high risk of failure. All the Olam bond USD/SGD was sold off (10% to 25%) . According to the UOB banker, there is a margin call on OLAM bond as it was given a LTV b4 muddy water report . I bought My OLAM USD 5.75% bond due 2017 in Sept 12 during the IPO. It was sold off from 100 to 76 in Nov12. It has recovered to 95 now. If I will to sell now, I would probably breakeven after deducting the borrowing cost + custodian fee.

I have managed to find Bond as an alternative some of income since 2011. Stock market is too manipulative. I have learnt a lot after the 08/09 crisis. Never trust the foreign/local bank research report , our SG stock GURU , your friends , your relatives , your broker/ remisier etc. They cannot be trusted because most of the time they get the timing wrong. Only trust FEAR. You will never be wrong if your trust FEAR. FEAR is your best friend when comes to investing.


rdgs
Vic

[starrynight]

Issuer Croesus Retail Asset Management Pte. Ltd. ( in its capacity as trustee-manager of Croesus Retail Trust)
Status: Senior, unsecured
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenor: 3 Years @ 4.75% area
Issue Size: TBD
Coupon: TBD
Payment: Semi-annual, actual/365 (fixed)
Issue Date: [ ] January 2014
Maturity Date: [ ] January 2017
Details: SGD250K/EMTN Programme/English Law/CDP/SGX-ST
Joint Lead Managers & Bookrunners
Timing: This week’s business, as early as today

[cbsh38584]

Olam SGD 6% bond was trading @103 before Muddy water report. But it went down <90 when Muddy water highlight that Olam runs a high risk of failure in Nov12.

Today, the Olam SGD 6% bond is trading at a premium 101. Those who believe that Temasek will not let OLAM fails & bought during the crisis. A return of 6% coupon + 10% (capital gain) within 1 yr.

rdgs,
Vic

[cbsh38584]

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 aborrower who does not make payments as promised.

Moody investment grade ratingAaa , Aa1 , Aa2 , Aa3 , A1 , A2 , A3 , Baa1 , Baa2 , Baa3

Moddy Non-investment gradeBa1 Ba2 Na3 B1 B2 B3 Caa1 Caa2 Caa3 D　

S&P and Fitch investment grade ratingAAA AA+ AA AA- A+ A- BBB+ BBB BBB-

S&P and Fitch Non investment grading RatingBB+ 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 pricesfall and vice versa. The rationale is that as interest rates increase, theopportunity cost of holding a bond decreases since investors are able torealize greater yields by switching to other investments that reflect thehigher interest rate. For example, a 5% bond is worth more if interest ratesdecrease since the bondholder receives a fixed rate of return relative to themarket, which is offering a lower rate of return as a result of the decrease inrates


Liquidity Risk
In an Liquid market, investors run the risk of either having to retainthe bond till maturity or selling it before maturity at an unfavorable priceIssue size = liquidity (US$50M- 300M?) (>US$500m more liquid ?)Establishing a fair price & price comparisons can be difficult orimpossible 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 1.13 (16th Jan14)


If U borrow (due to low rate 1.55%) SGD or USD to convert to Aust to buyAust 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 2017Olam 4.07% due Feb 2013


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


Perpertual bond (some do come with callable term)
A bond inwhich the issuerdoes not repay the principal.Rather, a perpetual bond pays the bondholder a fixed coupon aslong as he/she holds it. Pricesfor 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 tocompensate for inflation* S’pore’s central bank is studying the feasibility of selling Inflation-linked bonds to help citizens boost on savings amid lowinterest 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 apredominated ratio during a specified conversion periodEg Keppel land 1.875% due 2015 convertible bondConversion 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 CollateralEg OUE 3.36% due 2013.Back by Mandarin gallery & Mandarine Orchard.　　


Bond seniority
bondholders are credits & therefore have a higher priority calimthan equity holders in a liqudation or restructuring scenario.Senior bond has a higher priority claim than other bonds on the assetsissued by the same entity.


Subordinated (junior) bond
A class of bond that, in theevent of liquidation, isprioritized lower than other classes of bonds. For example, a subordinate bondmay 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 isrepaid. A subordinate bond carries higher risk, but also pays higher returns than other classes

[starrynight]

Vic,

Really appreciate your sharing your insights / experience / trades

Hope to learn more from you.

Started to invest in Bond only in 2010 using equity loan buying blue chip bond like DBS pref share bond , Capland & capital com trust convertible bond. Have sold & switched to higher risk bond with high yield 5% to 10%.

Net return minus borrowing cost ave 1.1% & Custodian fee 0.25%
=========================================
2010 = 30k

2011 = 70k (coupon + bond sold off with capital gain)

2012 = 140k (coupon + Bond sold off with capital gain)

2013 = 260k (Coupon + Bond sold off with capital gain)

2014 = est 190k (only coupon - Current bond holding est $3m)
Not much capital gain in 2014.

2015 = est 180k (only coupon)

2016 = est 180k (only coupon)

Holding junk bond is very risky. In 2011, the Greece crisis caused one of my Junk bond , Chinese developer Evergrande RMB bond (7.5%) dropped from 96 below 60. While capland bond only drops less than 10%. After the crisis, Evergrande bond price move up to 91.

In June12, Muddy water claimed that there is a massive fraud and imminent insolvency at Evergrande . The bond price was sold off from 91 to to 72. I manage to ride through the crisis & sold @ 101 in Apr 13. The evergrande bond will mature this year on 19th Jan14.

In Nov12, Muddy waters claimed that Olam runs a high risk of failure. All the Olam bond USD/SGD was sold off (10% to 25%) . According to the UOB banker, there is a margin call on OLAM bond as it was given a LTV b4 muddy water report . I bought My OLAM USD 5.75% bond due 2017 in Sept 12 during the IPO. It was sold off from 100 to 76 in Nov12. It has recovered to 95 now. If I will to sell now, I would probably breakeven after deducting the borrowing cost + custodian fee.

I have managed to find Bond as an alternative some of income since 2011. Stock market is too manipulative. I have learnt a lot after the 08/09 crisis. Never trust the foreign/local bank research report , our SG stock GURU , your friends , your relatives , your broker/ remisier etc. They cannot be trusted because most of the time they get the timing wrong. Only trust FEAR. You will never be wrong if your trust FEAR. FEAR is your best friend when comes to investing.


rdgs
Vic

[starrynight]

Update from Tradehaven:

CROESUS RETAIL TRUST – UPDATE
- Books in excess of S$500MM
- Final price guidance at 4.60%
- Final issue size at S$100mm

Issuer Croesus Retail Asset Management Pte. Ltd. ( in its capacity as trustee-manager of Croesus Retail Trust)
Status: Senior, unsecured
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenor: 3 Years @ 4.75% area
Issue Size: TBD
Coupon: TBD
Payment: Semi-annual, actual/365 (fixed)
Issue Date: [ ] January 2014
Maturity Date: [ ] January 2017
Details: SGD250K/EMTN Programme/English Law/CDP/SGX-ST
Joint Lead Managers & Bookrunners
Timing: This week’s business, as early as today

[starrynight]

Today's new issuance + commentary from Tradehaven:

Issuer: Hyflux Ltd.
• Issue: SGD subordinated perpetual capital securities
• Ratings: Unrated
• Format: Regulation S only and S274/275 of SFA
• Issue Size: TBD
• Tenor: Perpetual NC3
• Ranking: Subordinated to senior notes, pari passu to existing preference shares
• Call option: 2017 and at every distribution date thereafter at par
• Distribution: Fixed. Reset in year 3 based on prevailing SGD 3y SOR and every 3 years thereafter
• Step up: 200bps from year 3 onwards
• Timing: This week, as early as today
• Distribution deferral: Subject to dividend stopper and dividend pusher (with a look back period of 6 months). All payments on junior or (except on pro rata basis) parity obligations must be stopped while any distribution remains unpaid
• Information above from person familiar with the matter, who asked not to be identified because the details are private
• Price guidance: High 5% area, said a separate person familiar with the details

A reader mentioned about his Hyflux 6% perp (callable 04/2018, step up to 8%) last week and that it looked ripe to sell.
That is a retail issue traded in notional lots of SGD 1,000 on the stock exchange. Its last price was 105/105.75 (clean), 107/107.80 (dirty), yield 4.69/4.50%. The SGX price is 107.80/108.80 (dirty), implying a lower yield.
Hyflux is marketing a new subordinated perp today at high 5% coupon with 3 yearly resets with a 2% step up.
Some say they are paying up because of management problems with their board of directors quitting en masse, I will not speculate on matters of their corporate governance.
Here is a table of their outstanding debt.
Company Facts :
Market Cap SGD 974 million
Dividend Gross Yield 1.2%
Financial Leverage 4.4 times
Debt/Equity 239%
Debt/Assets 47.6%
Key Person risk 32.31%, Olivia Lum
Looking back in 2013, we note that there was a consent solicitation exercise for outstanding Hyflux bonds. This was to amend a certain covenant that would allow Hyflux to include “intangible assets” into their “Consolidated Tangible Net Worth” ratio which they had apparently busted (unverified as the exercise was a private exercise that I was not privy to).
I can imagine (note that I am using the word “imagine”) that they are building water plants for foreign governments which, of course, they would not be allowed to own for it is a strategic asset. The foreign governments do not pay for it and Hyflux is, instead, allowed to operate the plants for an extended concessionary period to recover their costs. Thus, classified as “intangible assets”.
As such, we note that their “intangible assets” on their balance sheet has swelled from SGD 226 mio in 2012 to SGD 747 mio in Sep 2013. This will be accompanied by heavy amortisation/depreciation over the years as they realise the income from their operation of the plants.
The key risk is in the jurisdictions that they operate in and whether they will be able to carry out their work for their entire concessionary period i.e. for governments or new governments to honour their agreements.
We note that their revenues have not grown between 2012 and 2013, suggesting perhaps maturity in their business model. And a perpetual bond is perhaps the most ideal way to raising funds because it is classified as equity and they will not be looking to raise money via the stock market with their stock price in the doldrums.
Having said all that, Hyflux is the market darling of Singaporeans and the pride of our country including, I am sure, Temasek. I am slightly dismayed that they managed to run themselves from lowly leveraged to a highly leveraged company. Paying up for the new perp is a necessary cost for them, so I would not settle for less than high 5%. Afterall, the Sembcorp Industries Perp came out at 5% last August and it trading at about 4.75% now.
We hope they will find greenfields to boost their revenue and continue to give us delicious Newater everyday.

[cbsh38584]

Hyflux Perp bond 5.75%
===============
Apply one lot in CS & Std C bank. Manage to get allocation only from Std C.


The risk for Hyflux is that it is a very highly leveraged company. The reason I apply Hyflux Perp bond is because of Temasek & SG government is paranoid about having enough water supply from our own reservoir & not to depend too much from M'sia.

rdgs,
vic

[starrynight]

Today's 3 issuances:

SGD New Issues Reviews : Stanchart Sub 12YNC7 4.5% and Ezion 5Y Senior and Maxicash VRN !!!


January 16, 2014 by tradehaven


New issues come out to prance and caper,
While rates behave before the Taper.
Croesus 4.6% 01/2017 is trading at 101 and Hyflux 5.75% perp sold off from 100.40 to 100.05 this morning.
NEW ISSUE: STANDARD CHARTERED PLC SGD 12 Non-Call 7

Standard Chartered PLC SGD 12 Non-Call 7 Callable Fixed-to-Fixed Rate Dated Subordinated Tier 2 Notes
ISSUER: Standard Chartered PLC
ISSUER RATINGS: A2/A+/AA- (M-Stable/S-Neg/F-Stable)
EXPECTED ISSUE RATINGS: A3/A-/A+
ISSUE TYPE: Dated Subordinated, Tier 2 Capital
FORMAT: Reg S Bearer Notes
CURRENCY: Singapore Dollar (“SGD”)
SIZE: SGD Benchmark
TENOR: 12 Non-Call 7 years
INITIAL GUIDANCE: 4.50% area
ISSUER CALL DATE: 23 January 2021, one time call
INTEREST BASIS: Fixed rate (semi-annual in arrear), single coupon
reset in year 7 if not called on Issuer Call Date
COUPON: Fixed at [ ]% until Issuer Call Date. If not
called on Issuer Call Date, coupon resets to the
prevailing 5-year SGD Swap Offer Rate (“SOR”) plus
the Initial Spread
SETTLEMENT DATE: 23 January 2014
FINAL MATURITY: 23 January 2026
DENOMS: SGD250,000 minimum / SGD250,000 increments
EXPECTED LISTING: London (listing to follow settlement)
CLEARING SYSTEM: Euroclear Bank / Clearstream
GOVERNING LAW: English Law
SOLE LEAD MANAGER: Standard Chartered Bank
TIMING: Today’s business
Current indic 7Y SOR: 2.29%
Thoughts :
Things they did not tell you – There is a loss sharing clause at the discretion of the regulator ie. Bank of England even though this is a Tier 2 paper. It is not the same as the perpetual’s CoCo structure whereby there is a deterministic call when capital ratios fall below the target level.
Stanchart has USD 4.87 billion worth of debt maturing this year. This bond is issued at the group level i.e. Stanchart Plc, which subordinates to the Stanchart bank issued papers.
A 7 year call avoids direct comparison to the local bank perps issued last year – the DBS Group 4.7% (5 year call) and the UOB Bank 4.75% (6 year call) and 4.9% (5 year call) perpetuals.
The Stanchart 7Y EUR subordinated debt credit default swap level is trading near its 3 year low at 1.68% which is equivalent to SGD 2.1%, thus this bond is coming out pretty close at 4.5%-2.29% = 2.21%.
There is no step up during the coupon refix after 7 years which is a bummer. But the biggest qualm of all is the fact that Stanchart is seen as less “systemically” important in the UK, being an emerging markets bank and as such, there is a bias to reason that the regulators may not be as “protective” as they would for another name.
Some secondary levels (under old rules).
1. Stanchart sub 4.15% 10/2021 (call 2016) SGD 750 mio indic yield 2.55%
2. Stanchart sub 5.25% 04/2023 (call 2018) SGD 450 mio indic yield not available
3. ABN Amro NV sub 4.7% 10/2022 (call 2017) SGD 1 bio indic yield 3.80%
4. DBS sub 3.1% 02/2023 (call 02/2018) SGD 1 bio indic yield 2.86%
5. UOB Bank sub 3.15% 07/2022 (call 07/2017) SGD 1.2 bio indic yield 2.60%
6. DBS sub 3.3% 02/2022 (call 02/2017) SGD 1 bio indic yield 2.72%
Having said all that, I expect Stanchart is testing the waters with this issue because it is going to be a long year for them and we should see a Tier 1 and many other issues before long just looking at their stock price. And this SGD issue is likely to go down well as I am hearing 70% leverage available to buyers. Finally, as this is a semi professional sort of website, we will not speculate on the rumours of takeover (note the blip in stock price this year).
NEW ISSUE: EZION HOLDINGS LIMITED SGD 5YR ISSUE

Issuer: Ezion Holdings Limited
Status: Direct, unconditional, unsubordinated and unsecured Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenure: 5 Years @ high 4% whisper
Issue Size: TBD
Payment: Semi-annual, actual/365 (fixed)
Details: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
Listing: SGX-ST
Everybody loves Ezion. Just look at this share price and I am not really interested in cross holdings. They may not pay your dividends but they pay you back handsomely in capital gains.
Healthy company with good accounts and amazing revenue growth as they keep growing and its no wonder they need to raise funds when their assets doubled between 2012 and 2013.
Comparables :
Ezion 5.25% 05/2015 indic yield 2.67%
Swiber 6.25% 06/2015 indic yield 4.98%
Ezra 5% 09/2015 indic yield 4.2%
Swiber 9.75% Senior perp callable 09/2015 indic yield 13.05%
Ezion 7.8% perp callable 09/2015 indic yield 6.14%
Swiber 7% 07/2016 indic yield 5.58%
Swiber 7.125% 04/2017 indic yield 6.17%
Ezra 4.875% 04/2018 indic yield 5.23%
Ezion 4.6% 08/2018 indic yield 4.32%
Ezion 4.7% 05/2019 indic yield 4.66%
Ezion new 5Y at high 4% is just a another regular issue, if we look at their 2019 paper. I guess for shareholders who feel a little tired of the capital gains they have been earning, they could look at something more stable for a change.
NEW ISSUE: MAXI-CASH SGD VARIABLE RATE NOTES
Issuer: Maxi-Cash Financial Services Corporation Ltd.
Status: Senior, Unsecured Variable Rate Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenor: 3 Years
Issue Size: TBD
Coupon: 1.70% p.a.
Payment: Quarterly, actual/365 (fixed)
Issue Date: 4 February 2014
Interest Period: 3 months
Put Option: Puttable by investors at end of 3 months
Call Option: Callable by Issuer at end of 3 months
Redemption Month: [*] February 2017, if not previously redeemed or purchased and cancelled
Details: SGD250K/MTN Programme/Singapore Law/CDP
Maxicash is the dream of all the money lenders and pawn shops out there. Shadow banking at its pinnacle.
Everybody who is in the lending business would love to be able to borrow at 1.7% unsecured legitimately and lend out at 20%, secured on someone’s bike or watch or stove or flat.
VRNs grew out of favour because of the high costs of running the programme but I guess their bankers probably feel more secure selling it to investors than lending money to them directly ? Or are we going to see an explosion of growth in the pawn shop business ahead with ValueMax coming into the marketplace ?
Relatively low risk 3 month alternative to fixed deposits yet I know an enterprising chap who has set up his own money lending business and getting way better returns than that. Maybe he should IPO too. Long live shadow banking !
Verdict : None.

[princess_morbucks]

These will heavily sway the sector.

Amid the impending results release by Singapore REITs, Barclays Research identified 3 key themes that will affect its investment outlook for the market in 2014.

The first theme is falling home volumes and prices, which the research firm said would confirm its negative stance on developers.

The second theme is the industry consultants' increasing positive view of the office sector, which would support Barclays Research's non-consensus preference for the Office sector.

The third and last theme is the new accounting standards, in particular the FRS110, which is expected "to change how consolidated earnings are determined with more weight given to de facto control and power."

"This consolidation rule change may go against the asset-light strategies of developers and may distort their performance metrics and ratios. However, this accounting change should not change our fundamental view of the sector," Barclays Research added.
- See more at: http://sbr.com.sg/residential-proper....b3XCgmZb.dpuf

[starrynight]

Today's issuance:

ISSUER:
Yuzhou Properties Company Limited
GUARANTORS:
Certain non-PRC subsidiaries of the Issuer
SECURITY:
Share pledges over all outstanding shares of the Guarantors
ISSUER RATINGS:
B1 Stable / B+ Stable (Moody's / S&P)
EXPECTED ISSUE RATINGS:
B2 / B (Moody's / S&P)
Initial Guidance:
8.875% area
FORMAT:
Regulation S, Registered form
STRUCTURE:
Senior, Fixed Rate Notes
SIZE:
US$ TBD (Indicative US$250M)
TENOR:
5NC3
USE OF PROCEEDS:
To repay certain existing indebtedness, fund the acquisition of land for residential and commercial property development (including through the acquisition of equity interests in entities that own development sites and assets) and for general corporate purposes
COVENANTS:
Standard HY covenants
DETAILS:
SEHK listing, New York Law, US$200k/1k denoms
JOINT BOOKRUNNERS:
BOC International, Citigroup, Deutsche Bank and HSBC
TIMING:
Today's business


Risk Rating:
5B
LV:
0

[cbsh38584]

Bought Chinese developer Shui On SGD 8% bond on Jan12 @100. Sold @103.9 on Jan14 to take profit (YTM est left only 4%).
Switch out to Central China real estate USD 6.5% bond due 2018 (callable in 2016) @98.1. The largest property developer in Henan. 27% own by Singapore CapitaLand which is in-turn 39.5% owned by Temasek.


Sold another Shui On SGD 8% bond @104.1. Switch out to recent IPO Hyflux perp 5.75% @ 100. High risk Perp bond due to it high levergaing. Buy because of Temasek.

rdgs,
Vic

[cbsh38584]

Let compare which will be a better investment for those marginal property investors who have < S$500k.



Hillford resort (LH 60 yrs) Vs quality Perpetual bond.
=========================================


Buy Hillford one bedroom 431sqft cost let say est S$450k + 7% ABSD
Assume this is the 2nd property. Assume pay full cash.

1.TOP Nov 2017.
2.No income for next 3 yrs until TOP 2017
3.Pay property tax after TOP 2017
4.Pay maintenance fee once TOP 2017
5.After TOP , need to come out some cash to furnish your apt.
6.Not guarantee it can be rent out after TOP. In between investor may not able to rent out due to weak rental market condition.

After 17 yrs, what is the rental U will get ? unpredictable. Will Hillford retirement resort appreciate 100% in next 10 yrs ? Will it value hold 30 yrs later ?

Progressive GST & property tax & maintenance fee & electricity bill
Building defects
Finding tenant & entertain tenant complaints etc
etc etc



=============================================
Buy 2 lots HK Cheung Kong quality Senior perpetual SGD bond 5.125% (callable 2016 @ 100) due 2049 (IPO was 100 in Jan 2011.).

Price is around 90. So total amount invested is (90X250) 2lots = S$450k . Yield to perpetuality (2049) estimate 5.7% @ 90. If U buy @ 86. yield to perpetuality (2049) est 6%.

Yearly payment is S$25,625 till the next callable date at 2016. If not call, continue to get S$25,625 till 2049.


After 17 yrs , your coupon payment rec will be est S$450k. The price of the cheung kong Perp bond may be >100 or 90 or 85 or 60 depending on the SGD interest rate (1% or 2% or 4% or 6%). As long you have the ability to hold till 2049. U don't care about the price movement. The only risk is that HK Cheung Kong company is bankrupt. The Chairman of Cheung Kong Holdings is Li Ka Shing, Asia richest man.


1. Yearly Coupon payment S$25,625 not taxable as for now.
2. Don't have to bother finding tenants & entertain tenant complaints.
3. Don't have to redo simple refurnishing every 3 to 5 yrs.
4. Don't have to bother the progressive property tax increase by the government.
5. Don't have to bother by the increase in the maintenance fee & electric bill
6. Don't have to bother by the GST increase by our government.
7. Don't have to bother by the building defects that may happen.
etc etc


There are some good SGD blue chip perp bond like SembCorp 5%. Singpost 4% etc etc.

===============================================
I maybe wrong in my investment strategy. Property is only for the rich. Marginal investors have a higher risk as their holding power is not there. Any setback like retrenchment , major illness & unhealthy spending habit on your credit card that happen. It will get you into financial trouble.


rdgs,
Vic

[teddybear]

Both I think sama sama.

perpetual bond has very high risks, people must take note! Cheung Kong may go kaput, especially if Senior Li not around, and what you hold is just a piece of toilet paper (but your property won't disappear just like that). Who knows?

With perpetual bonds, the company will not redeem your perpetual bonds, and you are stuck forever without buyer if the bond price is going down the drain.

Want to buy bonds, can, but don't buy "Perpetual bonds"! That is my advice.......................

Let compare which will be a better investment for those marginal property investors who have < S$500k.



Hillford resort (LH 60 yrs) Vs quality Perpetual bond.
=========================================


Buy Hillford one bedroom 431sqft cost let say est S$450k + 7% ABSD
Assume this is the 2nd property. Assume pay full cash.

1.TOP Nov 2017.
2.No income for next 3 yrs until TOP 2017
3.Pay property tax after TOP 2017
4.Pay maintenance fee once TOP 2017
5.After TOP , need to come out some cash to furnish your apt.
6.Not guarantee it can be rent out after TOP. In between investor may not able to rent out due to weak rental market condition.

After 17 yrs, what is the rental U will get ? unpredictable. Will Hillford retirement resort appreciate 100% in next 10 yrs ? Will it value hold 30 yrs later ?

Progressive GST & property tax & maintenance fee & electricity bill
Building defects
Finding tenant & entertain tenant complaints etc
etc etc



=============================================
Buy 2 lots HK Cheung Kong quality Senior perpetual SGD bond 5.125% (callable 2016 @ 100) due 2049 (IPO was 100 in Jan 2011.).

Price is around 90. So total amount invested is (90X250) 2lots = S$450k . Yield to perpetuality (2049) estimate 5.7% @ 90. If U buy @ 86. yield to perpetuality (2049) est 6%.

Yearly payment is S$25,625 till the next callable date at 2016. If not call, continue to get S$25,625 till 2049.


After 17 yrs , your coupon payment rec will be est S$450k. The price of the cheung kong Perp bond may be >100 or 90 or 85 or 60 depending on the SGD interest rate (1% or 2% or 4% or 6%). As long you have the ability to hold till 2049. U don't care about the price movement. The only risk is that HK Cheung Kong company is bankrupt. The Chairman of Cheung Kong Holdings is Li Ka Shing, Asia richest man.


1. Yearly Coupon payment S$25,625 not taxable as for now.
2. Don't have to bother finding tenants & entertain tenant complaints.
3. Don't have to redo simple refurnishing every 3 to 5 yrs.
4. Don't have to bother the progressive property tax increase by the government.
5. Don't have to bother by the increase in the maintenance fee & electric bill
6. Don't have to bother by the GST increase by our government.
7. Don't have to bother by the building defects that may happen.
etc etc


There are some good SGD blue chip perp bond like SembCorp 5%. Singpost 4% etc etc.

===============================================
I maybe wrong in my investment strategy. Property is only for the rich. Marginal investors have a higher risk as their holding power is not there. Any setback like retrenchment , major illness & unhealthy spending habit on your credit card that happen. It will get you into financial trouble.


rdgs,
Vic

[Royston8H]

Bond is safer but the returns may not even cover the current inflation rate in singapore. Though there are many hypes out there, my preferred alternative investment with proven track records, i.e. German property investment. At least i can see my money grows and work much harder at double digit year after year.

[proxon]

Bond is safer but the returns may not even cover the current inflation rate in singapore. Though there are many hypes out there, my preferred alternative investment with proven track records, i.e. German property investment. At least i can see my money grows and work much harder at double digit year after year.

What do you mean by

Returns: 14% Per Annum
Terms : 2 years
Payout : 14% (by end of 1st year); 114% (by end of 2nd year)

Assuming I put in 10k,

What do I get
1) by the end of 1st year?
2) by the end of 2nd year?

[Royston8H]

For this German Property Investment @ an assured return of 14% per annum for a two year period,

If you put in S$10,000 investment,

by end of 1st year, you will get $1400
by end of 2nd year, you will get $10,000 (full capital back) plus $1400.

Total Paid out for 2 year period is $12,800.

Developer is Dolphin Capital GmBh. See its review.

It worked for me pretty well.

[starrynight]

Yesterday's issuance:

Issuer:
Fonterra Co-operative Group Limited
Ticker:
FCGNZ
Format:
Reg S Bearer / EMTN documentation
Issue Ratings:
A+/AA-, both Stable (S&P/Fitch)
Currency:
CNH
Initial Guidance:
3.75% area
Structure:
Senior Unsecured
Maturity:
5yr fixed
Size:
Benchmark
Settlement:
T+7
Denoms:
CNH1m x 1m
Bookrunners:
CITI / HSBC
Timing:
Today's business
Risk Rating:
2N
LV:
Indicative 75%

[starrynight]

Today's issuance..

Vic, any thoughts? Looks not too bad? What on earth is a "keepwell deed" though?

Issuer:
Value Success International Limited
Guarantor:
China Ping An Insurance Overseas (Holdings) Limited
Keepwell Deed Provider:
Ping An Insurance (Group) Company of China, Ltd.
Guarantor Ratings:
Unrated
Expected Issue Ratings:
Unrated
Format:
Reg S, Registered
Size:
CNH Benchmark
Tenor:
3 year | 5 year
Price Guidance:
4.25% area | 5% area
Ranking:
Senior Unsecured
Details:
CNY1,000,000 x CNY10,000 denoms, SGX Listing, English

Law
Clearing Systems:
CMU with linkage to Euroclear and Clearstream
Active Bookrunners:
Bank of America Merrill Lynch, HSBC, Standard

Chartered Bank (Hong Kong) Limited
Passive Bookrunners:
BNP Paribas, J.P. Morgan, Ping An Securities
Expected Timing:
As early as today
Risk Rating:
TBC
LV:
TBC

[starrynight]

Yet another one...

Issuer: Towngas (Finance) Limited
Guarantor: The Hong Kong and China Gas Company Limited
Guarantor Senior Rating: A1 / A+ (Moody’s / S&P)
Expected Issue Rating: A3 / A- (Moody’s / S&P)
Expected Equity Credit: Moody’s 50% / S&P 50% (for first 5 years) / HKFRS 100%
Securities: Subordinated Guaranteed Perpetual Capital Securities
Maturity: Perpetual non-call 5
Status of the Securities: Unsecured and subordinated; senior only to ordinary & Guarantee:
Shares
Initial Guidance: 5% area
Format: Regulation S registered
Issue Size: USD Benchmark
Distributions: Fixed (s/a) for first 5 years at the Initial Distribution Rate, then resets at Year 5 and every 6 months thereafter at prevailing 6-month USD LIBOR + Initial Spread + Step Up (if applicable)
Initial Spread: Initial Distribution Rate less 5yr USD Mid Swap Rate
Step Up: 25 bps from Year 10, additional 75 bps from Year 25
Call Option: Callable at Year 5 and every distribution payment date thereafter
Optional Deferral: Cash Cumulative and Compounding subject to pusher on Junior / Parity Obligations (3m lookback) and stopper on Junior / Parity Obligations
Redemption Events: Gross Up Event (par), Minimum Outstanding Amount
(par), Equity Credit Classification Event (101% prior to Year 5; par thereafter), Accounting Event (101% before Year 5, par thereafter)
Details: USD200k/1k denoms, SEHK listing, English law (subordination provisions governed by BVI/HK law)
Use of Proceeds: Refinancing and General Corporate Purposes
Joint Bookrunners: HSBC, J.P. Morgan, Morgan Stanley
Expected Timing: As early as today's business
Risk Rating: 4C
LV: Indic 50%

[cbsh38584]

Today's issuance..

Vic, any thoughts? Looks not too bad? What on earth is a "keepwell deed" though?

Issuer:
Value Success International Limited
Guarantor:
China Ping An Insurance Overseas (Holdings) Limited
Keepwell Deed Provider:
Ping An Insurance (Group) Company of China, Ltd.
Guarantor Ratings:
Unrated
Expected Issue Ratings:
Unrated
Format:
Reg S, Registered
Size:
CNH Benchmark
Tenor:
3 year | 5 year
Price Guidance:
4.25% area | 5% area
Ranking:
Senior Unsecured
Details:
CNY1,000,000 x CNY10,000 denoms, SGX Listing, English

Law
Clearing Systems:
CMU with linkage to Euroclear and Clearstream
Active Bookrunners:
Bank of America Merrill Lynch, HSBC, Standard

Chartered Bank (Hong Kong) Limited
Passive Bookrunners:
BNP Paribas, J.P. Morgan, Ping An Securities
Expected Timing:
As early as today
Risk Rating:
TBC
LV:
TBC

When I bought Chinese developer Evergrande RMB 7.5% bond (dueJan14) in Jan11 , the x-rate was USD/CNH 6.53 or SGD/CNH 5.05. Today Jan14, USD/CNH is 6.06. Almost 7% currency appreciation since Jan11. For SGD/CNH 4.75 , it is est 6% appreciation.

I am not sure whether the RMB will be strengthen again next 2-3 yrs. It could stabilise or could weaken . This is the unknown currency risk now.


I prefer Aust bond if it currency weakness further weaken to Aus/USD 0.8 to 0.85. Get your banker to list down investment grade Aust bond to seek a better opportunities if it comes.

The min amt to buy Aust bond is Aus$50k. You require min US$200k for USD bond & min Rmb$1m for RMB bond. Amt too big for both USD/RMB bond.


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 1.12 (Jan14)


rdgs,
Vic

[cbsh38584]

Today's issuance..

Vic, any thoughts? Looks not too bad? What on earth is a "keepwell deed" though?

Issuer:
Value Success International Limited
Guarantor:
China Ping An Insurance Overseas (Holdings) Limited
Keepwell Deed Provider:
Ping An Insurance (Group) Company of China, Ltd.
Guarantor Ratings:
Unrated
Expected Issue Ratings:
Unrated
Format:
Reg S, Registered
Size:
CNH Benchmark
Tenor:
3 year | 5 year
Price Guidance:
4.25% area | 5% area
Ranking:
Senior Unsecured
Details:
CNY1,000,000 x CNY10,000 denoms, SGX Listing, English

Law
Clearing Systems:
CMU with linkage to Euroclear and Clearstream
Active Bookrunners:
Bank of America Merrill Lynch, HSBC, Standard

Chartered Bank (Hong Kong) Limited
Passive Bookrunners:
BNP Paribas, J.P. Morgan, Ping An Securities
Expected Timing:
As early as today
Risk Rating:
TBC
LV:
TBC

ICBC & other China bank have a "LI CAI" investment product in CHINA. It is like a fixed income. They have different risk level. The min amt to buy "LI CAI" fixed income is RMB$10,000 in CHINA. For a Low risk return , the return is est 4 to 4.3%. The tenure can be a few days to a few months to a year. FYI, their one year fixed deposit is around 3.7%.

My wife recently got it @ 6% for 6 mths tenure for a low risk fixed income level. This is due to the incoming Chinese new year in China. She has a ICBC RMB account in China (Not from SG) . So she buys the "Li CAI" product online from SG home.

I believe SGD/CNY (onshore) spread is lesser than SGD/CNH (offshore). I think the different can be 0.5% to 1% for SGD/CNH depend on the amt.

I think the above RMB bond which the coupon est 4.25% to 5% may not be attractive. You need RMB$1m to buy 1 lot. Too big amt for a new bond investor to commit into RMB bond. Furthermore, I am not sure whether USD/CNH will continue to strengthen to <6 or weaken to >6.1. or stabilize in the next few yrs.

The only disadvantage to buy this "LI CAI" product is that U need to open a account in China. U are allowed to only TT out min US$50k per year from China to oversea (SG) as for now. if u are a frequent travel to China. It will not be a problem.

I am now looking into Aus bond as it has weaken almost 20% from peak 1.09 (Aus/USD) . Now it is 0.88. If it drop to the range of 0.80 to 0.85 (may or may not reach this level), I will start to buy Aus bond. To buy 1 lot of Aus bond, the min amt is Aus$50k.


rdgs,
Vic

[cbsh38584]

Olam International announced that it has bought back SGD 39.2 million of its 7% perpetual bonds and SGD 15 million of its 6% 2022 senior bonds from the market.

The average prices of the repurchase were SGD 92.38 for the perpetual bond and SGD 92.96 for the 2022 bond.

The company said that the repurchase was done in order to optimize its balance sheet. While the bonds bought back are relatively small in relation to Olam’s total debt (SGD 8.5 bn as of September 2013), we view the development as positive and should be supportive of the company’s bonds in the secondary.

FYI, Olam Perp SGD bond 7% price @75 in Nov12 when Muddy waters issued a warning of a massive failure in Olam biz. Today the price is 92.

rdgs,
Vic

[irisng]

What do you all think of OUE reits

[cbsh38584]

DBS offer a promotional rate of 1.88 per cent for its five-year fixed rate loan in November'12.

If you can refinance your mortgage loan to a 5 yr fixed rate of 1.88 & DBS offers you are equity loan of let say S$750k base on your property value. If U can take calculated risk using your equity loan of S$250k to 500k (instead of full amount of S$750k) to buy good quality SGD straight bond that beat 1.88% for the next 5 yrs.

example
OUE SGD bond 4.25% due Oct19. Base buy price about 1.02. Yield to maturity est 3.6%. ( 3.6% Vs 1.88%. Still got some gain.)

OUE SGD bond 4.95% due Feb17. Base buy price about 1.045. Yield to maturity est >3.3% (3.3% Vs 1.88%. Still got some gain).

City development bond
Keppland bond etc etc


http://tradehaven.net/market/bonds-i...for-the-truth/.

You should seek the advise your experience banker opinion. The best is to ask for 2 experience bankers advice to help you in your decision if U decide to take the calculated risk.
.

rdgs,
Vic

[catsick]

rather buy safer hdb bond , almost no risk here , 3.5% ytm for 2024 bond

[cbsh38584]

DBS offer a promotional rate of 1.88 per cent for its five-year fixed rate loan in November'12.

If you can refinance your mortgage loan to a 5 yr fixed rate of 1.88 & DBS offers you are equity loan of let say S$750k base on your property value. If U can take calculated risk using your equity loan of S$250k to 500k (instead of full amount of S$750k) to buy good quality SGD straight bond that beat 1.88% for the next 5 yrs.

example
OUE SGD bond 4.25% due Oct19. Base buy price about 1.02. Yield to maturity est 3.6%. ( 3.6% Vs 1.88%. Still got some gain.)

OUE SGD bond 4.95% due Feb17. Base buy price about 1.045. Yield to maturity est >3.3% (3.3% Vs 1.88%. Still got some gain).

City development bond
Keppland bond etc etc


http://tradehaven.net/market/bonds-i...for-the-truth/.

You should seek the advise your experience banker opinion. The best is to ask for 2 experience bankers advice to help you in your decision if U decide to take the calculated risk.
.

rdgs,
Vic

Get your banker to print out the 2 yrs STI index Vs let say OUE bond. You will able to see the OUE bond price is very stable since Feb12. I think it did not fall < 100 (IPO price) for the last 2 yrs despite a few big correction in STI index in . Do it the same for other SGD blue chip bond if U feel comfortable & decide to look into it.

rdgs,
Vic

[cbsh38584]

Pls look at the stock target price by our own securities research house.

Capitaland target price between 3.80 to 4.10.- A recommend buy since 2013. Look at the price today. $2.84. Do U still want to trust their recommendation. They all get the timing of the tgt price way out. Are U emotional ready to hold for a long term ? Are U able to ride it through this downtrend without selling it ?


OUE target price between 2.82 to $3.32. A recommend buy since 2013. look at the price today @ $2.43. Do U still want to trust their recommendation. They all get the timing of the tgt price way out. Are U emotional ready to hold for a long term ? Are U able to ride it through this downtrend without selling it ?.

Most of the bond or pepertual bond issues by NOL, Hyflux, OLAM, NOBLE, OUE, CapitaLand, banyan tree etc are performing better than their own stock price. Some by a huge margin especially those commodities stock.


When comes to investing in equities. Most Women are more cautious & patience. They don't bet & trade often. They usually buy blue chips name. Their investment strategy is mainly for income. As for most man, their investment strategy is to strike rich asap. They bet & trade often. They usually buy high beta stock & worst of all follow herd instinct.


Let make investing simple for those who are busy working, don'tknow FA/TA well, not hard working to read financial report or don't want to pay expensive school fees b4 finally realize the past 10 yrs investing strategy is a failure etc.

1. Money is made by sitting, not trading all the time


2. It takes time to make money. Just be very very very patience.

3. There is a time for all things, but you & I don't know when.
But we know that when there extreme fear in the mkt. It is the time.
Herd investing is a guarantee for failure


4."Waiting is our most crucial job when comes to investing.

rdgs,
Vic