Why NOT Singapore Corporate Bonds ?

TradeHaven

Because if you had bought the into inaugural 30Y SGS issue at its auction in March this year, you would be sitting on an 8% return (10% if you had sold 2 weeks ago) for only 5 months ! Last done price on  SGX was 107.925 on 7 Sep 2012.

NA12100N 420401 10

PH1S

107.925

Correct me if I am wrong, but I believe this is a higher return than 95-99.99% of the corporate papers issued this year, including the star China Central Properties. Link to 2012 SGD Corporate Bonds Hall of Fame.

Here are the latest prices I could salvage. (Qualifier : Accuracy of data is based on last bid price I took off Bloomberg – No guarantees what the banker quotes for retail etc).

Now, who is holding their nose up to SGS ?

For the faithful readers, here is the catch you have been living with.

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SGD CORPORATE BONDS 2012 HALL OF FAME

TradeHaven

SGD 8 billion worth of corporate papers issued since Jul 1, some over 10 times oversubscribed.  I cannot help but feel little alarm bells ringing at the back of my head.

By far, insurance companies and private banks made up the bulk of the purchasers.

I decided to check out if safe was good this year by tabling all the chunky bond issues and seeing how much they have changed. For comparison’s sake, we will use Spread Changes, ie. the yield minus the SOR, to arrive at conclusion on whether there has been gains or opportunity loss instead of the brain numbing prices that bankers keep harping about to convince you that you have made a capital gain.

Quite back breaking work and yet fulfilling to see that SAFE IS NOT ALWAYS GOOD.
Qualifier : The mid prices are based off what quotes I picked off Bloomberg and do not…

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Staying Afloat In The Pool Of SGD Perps

Bumper crop of perpetuals hit the street as liquidity fuels the mad grab for yields. Abating credit concerns locally makes perps, quite suddenly, the flavor of the year so far for the retail segment.

You get worried when you see Genting do a retail tranche, particularly after their institutional tranche is still under water but Capitamalls is flying quite high. Yet it is undoubtedly part of the government’s push to get the man on the street investing. Initiative sprung  up last year quite suddenly in Parliament and voila, the market has taken off.  http://www.asiaone.com/News/The%2BBusiness%2BTimes/Story/A1Story20110111-257705.html

And of course our country’s push to become an Asian capital markets powerhouse. http://www.mas.gov.sg/news_room/statements/2012/Keynote_address_by_Mr_Ravi_Menon_MD_MAS_at_IMAS.html

Today Ascendas launched their perp issue. Not a bad one but I am still sore over missing SingPost (6 times oversubscribed !) 2 months back and will not have anything to do with it, not with QE3 half hanging in the air. Perps are meant to be traded too, you know.

Hey but one perp is not another. So I thought I would do up a table of perps issued this year to compare the apples and oranges and lemons out there. I would qualify that this is perhaps not the most comprehensive or accurate piece of information you would get, given that my perp expert friend has gone back to Israel for Passover holidays, thus perhaps its best viewed as a private opinion. Also threw in some of the subs, retail bond and reit issues for comparisons.

					CURRENT
ANNOUNCE	ISSUER	CPN	TYPE	SIZE	YIELD	RATING	CALL SCHEDULE	MIN DENO.
10-Apr-12	ASCENDAS PTE LTD	4.75%	PERPETUAL NC 5	300 MIO			Refix at Yr5 at SOR+351.2bp	250K
1-Mar-12	GENTING SINGAPORE PLC	5.13%	PERPETUAL NC 5	1800 MIO	5.19%	Baa3	Flat Step up 100 bp in Yr10	250K
8-Mar-12	MAPLETREE LOGISTICS TRUST	5.375	PERPETUAL NC 5	350 MIO	5.15%	Baa3	Refix at Yr5.5 at SOR+418 bp	250K
24-Feb-12	SINGAPORE POST LIMITED	4.25	PERPETUAL NC 10	350 MIO	4%		Refix at Yr10 at SOR+369.2	250K
22-Feb-12	OLAM INTERNATIONAL	7%	PERPETUAL	275 MIO	6.95%		Refix at Yr10 at SOR+596.5 bp	250K
????	NEPTUNE ORIENT LINES LTD		PERPETUAL				150 bp step up on Yr10	250K
5-Jan-12	CAPITAMALLS ASIA TREASURY	3.80%	SENIOR NC 5	400 MIO	3.75%		Coupon Step Up to 4.5%	1K/1K
16-Jan-12	GLOBAL LOGISTICS PROPERTY	5.50%	PERPETUAL NC 5	250 MIO	5.25%	BBB-	Refix Yr5 at SOR+420 bp	250K
31-Jan-12	DAH SING BANK LTD	4.88%	10Y SUB LT2 NC 5	225 MIO	4.50%	Baa1/BBB	Refix Yr5 at SOR+376 bp	250K
6-Mar-12	BANK OF EAST ASIA LTD	4.25%	10Y SUB LT2 NC 5	600 MIO	4.20%	A3/A-	Refix Yr5 at SOR+308.5 bp	250K
19-Jan-12	ASCENDAS REAL ESTATE INV	4.00%	10Y SNR	600 MIO	4.50%	Baa1		250K

All of them seem to be doing well compared to launch price.

Genting appears to be the only perp trading under water, probably due to the combination of its issue size being the largest bond issue in history and its poor structure with only a Flat Step Up of 1% on Yr 10 which does not compensate for prevailing interest rates then.

Ascendas threw in 2 step ups for good measure. 100 bp on Yr 10 and another 100 bp on change of control (JTC parentage).

The NOL issue seems to have hit a wall which is a good sign that the market is getting more Credit Savvy ! and will not buy without a change of control clause (look what happened to Chartered Semiconductor !… now called Globalfoundries)

What I Like To See In A Perp

Best method of evaluation has always been the fair and equitable rule.

No, we are not interest rate idiots. No, we are not dumb enough to think that a 100 bp step up makes up for everything from year 10.

No, we will not be sold a 5Y callable with no step up and told its a 5Y bond.

No, we are not unaware that credit spreads matter.

And no, multiple calls cost money and we must be paid for it.

The thought of buying a perpetual frightens me. The idea of a bond that goes on forever, taking my money with it for the rest of my lifetime. I like to buy a loaded perp. Loaded with lots of life buoys for the investor. That is a caring perp, a thoughtful perp, a perp that you can sleep with.

That’s all for now…. when perp expert gets back, he may have more to say.

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