I was toying between calling this article Crime Watch instead of Review and then thought the better of it. Willing buyers and willing sellers so I won’t say much for fear of being accused of fear mongering ??!!


This is not my grandmother’s Guthrie ! Only the name left. My grandmother’s favourite stock Guthrie went into Sime Darby. This one is owned by Salim.
That aside, this is a rather small company (SGD 695 mio market cap) to have a SGD 5oo million MTN programme.

So they tell us they need SGD 100-200 or whatever we can spare for their general working capital purposes but their balance sheet has SGD 340 million CASH as of Sep 2012.

Their company size would be more in line with Nam Cheong Limited (SGD 516 mio market cap) whose recent 3Y issue at 6% was a boon to bond holders and Nam Cheong’s MTN programme is only SGD 200 mio which gives bond holders more comfort than SGD 500 mio.

And granted that 99% of their assets are encumbered**, an opinion (not mine) of a financial market professional is that at 4%, it is better to be buying the Equity than the Bond.  3 cheers for Nam Cheong !

** There is about SGD 250 million of bonds secured on Jurong Point that are due in Apr 2014.

EZION HOLDINGS PERPETUAL (UNRATED) 8% indicative yield Callable after Year 4

Nothing of value to add especially when told that this is being issued due to retail demand (current price of Ezion 7.8% Perpetual callable 09/2015 at 100/100.50). It is definitely something I told everyone of any significance to me, NOT TO BUY.  But its entirely your prerogative and your money.

7.8% ? Because EDB invested SGD 19 mio in them ? (Market Cap SGD 1.6 bio)

Personally I think this business is going to be quite squeezed for margins going ahead as capacity grows but I am no expert. Their cash flow is not looking too hot, running on negative for the past 4 quarters.

Equity has outperformed, more than doubling in a year. Market cap rising dramatically from SGD 422 mio in Dec 2011 to 1.36 bio in Sep 2012.

UNICREDITO S.P.A. (BBB+ negative watch Baa2 negative. Bond will be potentially rated BBB/Baa3) 10.5Y NC 5.5Y 5.5-5.75%

Banks would have sent out enough information to convince you to buy.

My take is this. LT2 does not technically exist anymore with the new Basel 3 rulings where it becomes Tier 1 and is loss absorbing. There is a fine print in it, however.

” Governing law:           English Law other than the subordination provisions which will be under Italian Law”

Italian law on Singapore shores ?  I want to share with you this chart because you could be getting the same bond at about 10% in June last year when Unicredito’s Subordinate CDS 5Y was at 9%. It does look like SG clients are buying at a 18 month year low.


Positive News :

Berlusconi Says Would Back Draghi as Italy President

I got a feeling equity will do well going ahead. With so many bonds, shareholders should be in the happy camp.