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Thread: BOND THREAD

  1. #2641
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    Default Re: BOND THREAD

    Sying, I'm not familiar with the company nor counter, so I can't comment.

    Best to read the latest quarterly report to look at the balance sheet, etc. and do some research on the properties, how many % sold, etc.

    https://www.bondsupermart.com/bsm/home may be a useful resource too - you can type "frasers property" and see if there are articles. They are probably a bit dated, so have to be mindful of that

  2. #2642
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    Default Re: BOND THREAD

    Ok, thanks!!

  3. #2643
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    Default Re: BOND THREAD

    Quote Originally Posted by sying View Post
    Thks Starrynight... I thought it’s going to be another potential default
    This bond Shd be “safe” enough to hold?
    Hi Sying
    I don't think there is anyone here can give u a reply.
    Starrynight suggested to read the financial statement, but there are many things not show there like future cash flow especially during this period, order books, commitments etc etc.
    IMO, Financial statements are history especially in the situation now.
    On top of all these, there are still terms of the bond issuance.
    Vic has shared many insight knowledge somewhere in this thread, but I cannot recall when as this thread has lasted many years. Please check it up if you have time

  4. #2644
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    Default Re: BOND THREAD

    Thks laguna!! . I will search for it .

  5. #2645
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    Default Re: BOND THREAD

    worth subscribing to this for some insights: https://thebahnsengroup.com/dividend-cafe/

  6. #2646
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    Default Re: BOND THREAD

    Carnival had to shell out 11.5% coupon for 3 year bond(!): https://www.reuters.com/article/us-h...source=twitter

  7. #2647
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    Default Re: BOND THREAD


  8. #2648
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    Default Re: BOND THREAD

    https://www.bloomberg.com/news/artic...ged-everything

    Markets

    No Junk Debt Is Too Risky: How Fed’s Bailout Changed Everything

    By Davide Scigliuzzo, Craig Torres, and Lisa Lee

    April 28, 2020, 6:00 PM GMT+8 Updated on April 28, 2020, 10:08 PM GMT+8


    Long before the coronavirus pandemic would bring business to a standstill all across America, Surgery Partners Inc., a sprawling network of outpatient clinics, already had its share of financial problems.

    This was no secret on Wall Street. Surgery Partners’s majority owner, the buyout firm Bain Capital, had loaded so much debt onto the company’s books that when it went to the market last year to refinance maturing bonds, investors demanded a 10% interest rate to compensate them for the risk. The debt was rated CCC -- eight levels below investment grade.

    Even a moderate downturn, it was understood, was going to raise existential questions about the company. So by late March, with the economic effects of the outbreak in full force, frantic investors braced for default, pushing the price of those bonds below 55 cents on the dollar.

    But then the Federal Reserve did something it had never done before. It pledged to buy risky corporate debt as part of its emergency financing package for the economy. The move was so aggressive and sparked a rally that was so powerful and broad-based that today those bonds are all the way back up near par value, and Surgery Partners was able to raise another $120 million from loan investors earlier this month.

    It all has worked out so fortuitously for the creditors and equity holders of Surgery Partners -- and those of scores of other companies with similarly shaky balance sheets -- that the Fed’s actions carry a grave risk: that investors, rather than being chastened, will be emboldened to take greater chances and seek fatter returns in the future, believing that policy makers will be there to bail them out if they get in trouble.

    Economists refer to this phenomenon as moral hazard, and it hasn’t been this big a concern in a long time, perhaps not even during the 2008 financial crisis.

    “It’s an exquisite irony,” said Nathan Sheets, chief economist of PGIM Fixed Income. “What the Fed is doing is necessary to get the markets going again, but on the other hand they leave investors thinking the Fed has their backs.”

    Decade of Warnings

    That’s not to say the Fed’s policy approach doesn’t have its merits. In fact, it may well have helped avert another financial crisis and possible economic depression. But there are also very real, significant risks that come with such an aggressive response.

    The central bank had spent more than a decade telling the public that it was unwavering in its resolve to force Wall Street to rebuild its capital buffers so it could lend both in good times and bad. Yet even after banks beefed up their reserves and cut back on risk-taking with their own funds, the financial system is yet again in need of extraordinary support.

    “It’s as if they believe the banking system no longer works,” said Paul Tucker, former Deputy Governor of the Bank of England and chair of the Systemic Risk Council, a think tank of former regulators.

    What’s worse, according to Tucker, is that the Fed might have altered investor incentives for years to come, creating even more instability in the next downturn.

    A spokesperson for the central bank declined to comment.

    Moral hazard risks are hardly confined to the universe of Wall Street creditors.

    At a time like this, when trillions of dollars of taxpayer money are being pumped into the economy and financial rules are being rewritten to provide additional relief, these risks pop up everywhere -- from the bankers and private-equity executives who loaded their companies up with too much debt to homeowners who took on bigger mortgages than they could afford and even to, according to President Donald Trump and his allies, some states that ran big budget deficits and are now seeking federal aid.

    The Fed program, for its part, was designed to be targeted in its scope. The central bank said it would buy junk debt only of some companies that recently lost their investment-grade status. Its purchases of collateralized loan obligations, which are in turn the biggest buyers of leveraged loans, will be limited to a small set of the securities.

    And even the loans that the central bank will help originate directly have restrictions on leverage that will likely leave out many private-equity owned companies.

    Yet what’s transpired since the expanded plan was announced on April 9 is that none of the fine print really matters, at least not now. Markets are rallying even though the Fed has yet to formally set up the facilities through which it will make the purchases or extend new loans. There is also confusion as to which companies would even qualify.

    “The signaling effect of what the Fed is doing is powerful,” said Jack Janasiewicz, a portfolio manager at Natixis Advisors. “It was enough to shift sentiment, and when we start to feel better about things, we start buying. Worst-case scenario, if things really fall apart, the Fed will step in.”

    Junk Revival

    Junk bonds have already recovered roughly half of the losses they suffered during the recent sell-off, while the leveraged loan market is also on the mend. Speculative-grade bond issuers have sold more than $34 billion of debt so far in April, one of the busiest months in recent years.

    Companies whose business have been ravaged by social-distancing measures adopted to contain the spread of the coronavirus such as SeaWorld Entertainment Inc., AMC Entertainment Holdings Inc. and Gap Inc. have all successfully tapped bond investors to boost liquidity.

    As a result, default rates may not rise as much as initially expected, according to analysts from JPMorgan Chase & Co. and Morgan Stanley.

    High-yield bond and leveraged loan returns have bounced back after March's selloff

    Some bankers who arrange debt deals for junk-rated companies and their private equity owners are encouraging even riskier borrowers to access the market while the times are good. That would allow buyout firms to sidestep more difficult bank financings or more expensive equity capital injections, which many see as anathema.

    Surgery Partners got enough interest from leveraged loan buyers for 10 times the amount it was seeking to borrow earlier this month. While it still paid a punitive yield of over 9%, that was well below the more than 12% it had initially marketed.

    A representative for both the company and majority owner Bain Capital declined to comment.

    Everyone Wins?

    The Fed’s decision to wade into certain high-yield, high risk junk-bond ETFs is one of the more controversial steps taken by Chairman Jerome Powell. Depending on the securities it buys, the move could expose the central bank not just to high quality speculative-grade issuers, but also to corporations on the cusp of bankruptcy.

    After years of risky companies taking on unprecedented amounts of debt, weakening lender safeguards and blurring earnings math to appear more credit worthy, some now argue the Fed is turning everyone into a winner, distorting asset prices in the process.

    “Once you start fixing prices, the information content is lost and they no longer tell us anything about risk and reward to help allocate resources,” said Peter Fisher, a professor at Dartmouth College’s Tuck School of Business and former head of fixed income at BlackRock, which is managing some of the Fed lending facilities.

    Even more troublesome is that the Fed had been warning for more than a year about corporate leverage buildups amid the record economic expansion.

    In a financial stability report published last year, the central bank noted that the share of new loans to large corporations with debt-to-earnings ratios above 6 times had increased past peak levels previously seen in 2007 and 2014 when underwriting quality was poor.

    Distorting Incentives

    Srinivas Dhulipala, a former prop trader at Bank of America Corp., said he shuttered his hedge fund last year after falling behind rivals partly because he was unwilling to take outsized risks on his credit bets. He believes the Fed is distorting incentives in the marketplace.

    “The Fed is saying if you were willing enough to take too much risk, then don’t worry, we will bail you out,” he said in an interview. “Of course the virus was a big hit,” he added, but the market “was trading with absolutely no cushion for any type of a shock.”

    Matthew Mish, a strategist at UBS Group AG who has often highlighted risks building in corporate debt, has a more generous assessment of Powell’s actions so far. He argues the central bank needed to prevent an economic crisis from turning into a financial one and that the benefits filtering through to the riskiest borrowers have so far been minimal.

    “What I am concerned about is if the Fed ultimately has to expand the credit box, because the next time they expand it is going to be bailing out highly levered, private-equity owned companies,” Mish said. “That would be the definition of moral hazard.”

    For some, that bridge has already been crossed.

    “If they now provide a significant amount of support to get those firms that were heavily leveraged through this, everybody will assume that they will do it next time,” said William English, the former director of the Division of Monetary Affairs at the Fed Board who is now a professor at the Yale School of Management. “They will have to be clear that they are only doing this with gritted teeth.”

    — With assistance by Sridhar Natarajan
    (Updates to note confusion over qualification for Fed bond purchases in 17th paragraph)
    Last edited by reporter2; 29-04-20 at 03:35.

  9. #2649
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    Default Re: BOND THREAD

    Recent bond redeem OUE 3.8% in Apr20.
    1) NOL 4.65% maturity Sep20 >6%
    2) Unigroup USD 6% Dec 2020. YTM >7%
    Hopefully ok.

    Recent Corp bond bought this year. Hopefuly they are ok.
    Metro 4% due Oct 2021 @ 97.8. YTM >6%
    Chip Eng Seng 6% due Mar 2022 @97. YTM>7%
    Cathay pacific airline. 3.375% airline due Jan 2023@98 .YTM 4%. (Luckily hk govt $5b bailout.

  10. #2650
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    Default Re: BOND THREAD

    I am a risk taker. During the 2006 to 2008, I did many derivative financial instruments (FX option,ELN,FCN, KiKO etc) especially ACCUMULATORS product. The worst is that I leverage up & the bank did not stop me (No TDSR) . I was way way over leverage (150% -250% ) . Reit companies only 30% to 50% leverage. I did >20 of the ACMULATORS. It was easy money during the bull run from 2006 to late 2007. I remember I was in Switzerland holiday in 2007,my RM called me to do ACCUMULATOR trade on ZIJIN gold mining. I executed the trade & an hour later, it was K.O. Profit S$33k. This is one of my trade. I did it for Kepcorp, Comfortdegro, CNOOC, China Telcom etc etc. Never in my life that the ACCUMULATORS product almost "KILL ME LATER" during the Lehman crisis. I managed to survive as I cut lost in Mar2008 before the full blown US financial crisis on Sept 2008. At that time, US asked China for help & both eventually work together to ride out the crisis. Just imagine Zijin stock drop to HK1.36 at the peak of the crisis. After 1 yr later, it move up $9+. Osim (high was $2.5) was 0.06 cents in 2009. After the crisis, it move up to $1.80. It was later privatize at $1.50 (I think).

    No lesson can be learnt is as vivid as long lasting as it my own HARROWING experience. I trust nobody especially the bankers advise. Taking financial advise from banker to leverage very high risk product is like taking medical advice from a "drug dealer".

    After the 2009, I decided to switch to Bond trading due to low borrowing cost (0.9% to 1.3%). My 1st corp bond I bought was DBS pref 4.6% ( 2 lots) through Equity loan in 2010. The coupon was high for investment grade between 3-5% during 2010 to 2014. Junk bond was between 6% to 12%. The bond mkt was in the bull run due to QE1 , QE2 & QE3. So I leverage up again with caution to max my profit. I usually search for top bond fund top 10 holding & just buy what in the top 10 holdings. Some are through bank recommendation. I hv traded >100 of the corp bond. Buy during IPO & sell within a few mths to 1-2 yrs or Hold till maturity. Some bond I bought was recalled (like Petra Food , Chip Eng Seng & early NOL bond) early with extra 1% incentive. I make almost >80k from NOL bond alone.

    I bought Indonesia Trikomsel but it defaulted in 2016. It is a intentional default (scammed). Trikomsel name sound the same as the Indonesia largest TELKOMSEL (largest Telco) vs TRIKOMSEL. Some people thought that they are buying the TELKOMSEL corp bond which the name sound the same as Trikomsel.

    I do have many sleepless nite for 3 of the corp bond , China Evergande (dropped <80) & Olam perp (dropped <80) which were attacked by MUDDY WATER. Also during the Russia oil crisis , Indian Vendata bond (US$400k) dropped 100 to 70. I managed to ride out the crisis.


    The reason why I switch to Bond
    =========================
    1) Less volatile. less emotional.

    2)Since I dont monitor often. I can spend more time teaching my sons & take care of my Parkinson mother.

    3)Lazy to learn more in detail about Charting. It does help.

    4)100% TOTAL emotional instability if I will to leverage on equity again. Bond due to low volatility. I will make less emotional mistakes. Buy high sell low.Inability to cut loss if the trade turn bad or disruptive technologies like singtel , starhub ,SPH etc.

    5)Stock mkt is a big casino. The manipulators will use all mean to entice the Greedy ones, the emotional ones, herd instinct ones, the impatience ones etc to trap them. Your money become their money using know weakness human emotional. It is all about Mind manipulation.

    6) Bond price drop less (3-8%) as compare to equity (10% to 30%). The best is that investment grade bond like HDB, SMRT , PUB etc dont really drop alot (1-2%). So there is a opportunities to switch equity. Eg.My NOL (4.65%) bought @98 will be redeemed on 9th Sept20. So I may switch to equity like Capitaland , Bank etc. I have bought SIA $3.68 (at my wife request) & HK land@US$3.68. Challenger @0.435 (hope can privatise).


    The bull run for bond is over as from now. The coupon is getting lower & lower. Eg HDB 10 yrs bond (due 2022) IPO in 2012 coupon is 3.98%. The recent (Jul20) HDB 10 yrs bond (due 2030) IPO coupon was 1.62%.
    U need to wait for another crisis to come to wait for the investment bond to drop.

    I am switching some of my corp Bond to "CPF BOND" which more safe & high interest rate & guarantee by govt. I value security as I approach age 55. Top up my father (>age 80) RA to the max. Slowly top up my Father CPF MA.

    My wife has been doing reasonable well in her high risk fixed income. I managed to cajole, entice , persuade ,coax , influence her to lock in part of her profit into her CPF SA & I will match her top up.I know that if I did not plan her retirement way head (15 to 20 yrs). She & I will definitely be more stressful when the time come. I want her to have her own bigger retirement fund at age 55 onward.


    --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    The extremely low interest rate is creating a bigger blackhole. Many people include my wife start to trade equity. I told her NOT TO TRADE. She has the same emotional weakness as most of the investors. GREED , Fear, Revenge (ave down) , think she can beat the 4% easily, Peeping TOM which make her more emotional unstable. But she refused to listen to my advise. I dont think she will lose alot as she buy only RED chip & with capital only $40k. Initially she makes 8k when she started her trading of stock 4 mths ago. Now but to Square one after trading for 4 mths.

  11. #2651
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    Default Re: BOND THREAD

    Fortunate to have your hindsight sharing and wisdom, so CPF RA is unmatched by any other investments at this moment, all things considered?

    BTW am shocked to find this thread still alive after so many years!
    click: 🏢shoeboxmickeymousehouse 🏢

  12. #2652
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    Default Re: BOND THREAD

    Quote Originally Posted by mcmlxxvi View Post
    Fortunate to have your hindsight sharing and wisdom, so CPF RA is unmatched by any other investments at this moment, all things considered?

    BTW am shocked to find this thread still alive after so many years!
    This thread started in Oct 2012.. and it is still alive with Vic is the most valuable contributor.

    I am now holding about 40% cash, 50% properties and 10% commodities.

    Liquidated all bonds in Aug

  13. #2653
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    Default Re: BOND THREAD

    Quote Originally Posted by Laguna View Post
    This thread started in Oct 2012.. and it is still alive with Vic is the most valuable contributor.

    I am now holding about 40% cash, 50% properties and 10% commodities.

    Liquidated all bonds in Aug
    Laguna is baaaack!

    I think what you did is a super wise move, given today's environment.

    But why you need so much cash, and where do you park it? CIMB? Singlife? MCO?
    click: 🏢shoeboxmickeymousehouse 🏢

  14. #2654
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    Default Re: BOND THREAD

    Quote Originally Posted by mcmlxxvi View Post
    Laguna is baaaack!

    I think what you did is a super wise move, given today's environment.

    But why you need so much cash, and where do you park it? CIMB? Singlife? MCO?
    On and Off, I visit this forum.

    Life has been very kind to me... Used to travel extensively in the last few years till Jan 2020. Cancelled four trips this year...

    Now having daily 2-hours badminton and 20 laps swim,

    My cash is just enough for me to live till my last day.

    I park cash in S$, Yen and some US$. Commodities...bought last year and still sitting on them.

    Life is rather peaceful now as no threatening position.

    Most likely will move into market (mainly equities) around end Oct - mid Nov.

  15. #2655
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    Default Re: BOND THREAD

    TSINGH 6.000% 10Dec2020 Corp (USD)

    Unigroup International Holdings Ltd

    I bought this junk bond @ 98 because one of the top 10 holding for that particular bond fund. High risk & it did drop as low as 70+. But it should be called by 10 Dec20.
    This will be probably my last USD junk bond I will invest when it matured. I recently bought HSBC HY bond fund (LTV 75% ) so that there will be no concentration risk.
    Coupon est 5% to 6%. . I am looking in buy another bond fund in RMB denomination.

  16. #2656
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    Default Re: BOND THREAD

    Good to hear that! Keeping active is fantastic, what more with activities you are passionate about.

    Truly living the life the way you want!

    Quote Originally Posted by Laguna View Post
    On and Off, I visit this forum.

    Life has been very kind to me... Used to travel extensively in the last few years till Jan 2020. Cancelled four trips this year...

    Now having daily 2-hours badminton and 20 laps swim,

    My cash is just enough for me to live till my last day.

    I park cash in S$, Yen and some US$. Commodities...bought last year and still sitting on them.

    Life is rather peaceful now as no threatening position.

    Most likely will move into market (mainly equities) around end Oct - mid Nov.
    click: 🏢shoeboxmickeymousehouse 🏢

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