SGD RETAIL BOND ISSUE : FRASERS CENTREPOINT 7Y 3.65%
I cannot believe how many phone calls I have got in the past 2 days about savings plans. About 3 or 4 from various insurance companies and banks, telling me all about their wonderful savings deals and probably hoping deep down inside that I have not read anything about the new Singapore Savings Bonds.
At the same time we have the bond market melting down in other parts of the world.
Bond Traders Put on Alert Everywhere by $456 Billion Market Rout
Yet Singapore is safe because our rates have been steadily going up for the past 6 months as German bunds traded negative and it does serve them right now that there is a correction.
Today ! More on the retail front !!
Frasers Centrepoint Unit Offers Up to S$200m 7-Yr 3.65% Bonds
Details on SGX : http://infopub.sgx.com/FileOpen/Launch%20Announcement_Pegasus_12May15.ashx?App=Announcement&FileID=349262
Looks like they cannot wait for the retail bond rulings for they potentially qualify for the “exempt” issuer list i.e. they would be able to launch retail bonds without seasoning the bonds in the OTC market for 6 months.
This is a standalone issue and will not be off its MTN programme which issues under FCL Treasury Pte Ltd.
7Y SGS (govt bonds) are trading at 2.21% at the moment. 7Y interest rate swaps are 2.45% and the 4 year high in 7Y rates occurred last week at 2.5%. Thus we can say the bond is pricing at the high end of the rate spectrum, giving us a credit spread of 1.2%, which is about 0.5% tighter than the 7 year FCL paper issued last year (when interest rates were lower) at a coupon of 3.95%.
Table of comparison
Not exactly good value if we compare to the spreads that they pay in the OTC market but then this is a retail bond afterall with a denomination of $1,000 and we have very little to choose from at the moment.
List of retail offerings on the SGX.
*note that DBS and OCBC perps are subject to call anytime which makes those yield numbers void.
It is really the consumer’s choice as far as I am concerned.
thanks for the analysis.
Like you said, not much choice, so probably we poor retailers gotta buy this just for diversification from stocks.
The other bonds e.g perps and bank bonds are subordinated and have call features so not apple-to-apple comparison.
I would not limit myself to a straight single-name bond alternative and call features are nothing to be afraid of. Fixed income is a very broad base category even for retail investors.
FCL 3.65% retail tranche starts trading on the SGX today.
SGX price 100.50/100.60
OTC price 100.15/100.35 which works out to be dirty price 100.21/100.41.
Hi tradehaven, thanks for your useful and timely update of the FCL retail and institutional tranche. Btw do you happen to know what is the latest ask, bid and last done price of Gallent venture 5.95 which is maturing next April? I was thinking it might be a good idea to get a lot cos the price might have dipped a bit due to its latest 7% bond. I was thinking since it probably wont issue any more new bonds in the near future and even if it does, it probably wont affect the ablility of Gallent Venture to pay the debt of a bond which is maturing in less than a year. Not sure if I am thinking along the right though. haha.
Thanks again Tradehaven.
Not sure if anyone is selling this paper. Price looks a tad wide at 99.95/100.80.
They cannot issue anymore because they have maxed out their borrowing on their bond programme although I do not think it should be a problem to up the size in the future.
Thank you so much for the information. I am wondering if I am right to think that if they up the size the new bond they are going to issue is probably going to at least a year or more likely two years or more. So it wont affect their ablity to pay back the bond holders of the Apr 2015 5.95% issue even if do up the size. Not sure if i am right haha.
Not sure too.