New Issue Review : CWT 6Y SGD 4.1%

– CWT announced a new 6yrs issue after strong IOIs after SG roadshow

– Deal terms: 6yrs at initial price guidance of 4.1% area

– CWT Limited is a leading solution provider of integrated logistics and supply
chain management. CWT has a strong brand name and long standing relationship
with customers with over 40years of proven track record

– Comps:
AAREIT 4.9 2016-  105.00, 3.30%
GPACK 4.5 2019-  103.50,  3.88%

Not an expert on logistics companies that were once upon a long time ago, owned by PSA.

The bond issue should make sense for them from the financial planning and prudency point of view. Their short term liabilities have exploded and account receivables growing at an alarming rate, well above revenue growth.

Their MTN programme is for SGD 500 mio worth of notes.

Market capitalisation is SGD 927.5 mio only because their stock price is up 26% this year which does not make borrowing another 500 million on top of their SGD 1.6 bio borrowings vs assets of SGD 2.2 bio of which 917 mio is in accounts receivables, look very pretty on their financial leverage ratio (which at 3.8 times looks a little closer to Olam’s 4.9 times rather than their comparable Goodpack which is under 2 times).

They have very little fixed assets in their books and their worth is only measured in the government contracts and leases under their belts.

Unlike Nam Cheong, they have chosen not to pay up for their virgin issue because I think 4.1% is sliced a little too thin to impress and win the hearts of fans.

For all my rants about NOL in the past, if people are willing to buy at such spreads, then why not give NOL (and Temasek) a chance ? It is a recognised name with a benchmark issue size and a major subsidiary of Temasek.

NOL 4.4% 11/2019 is trading at 4.13/4.02 % (101.50/102.00). It is callable in 11/2017 at 102.20.

Yesterday’s Swiber 4Y milked SGD 160 mio at 7.125%. Price today at 100.375/100.625.

Note : Not every single bank can buy this bond.