New Issue Review – First Reit 5Y SGD Bond
*** First REIT 5-yr SGD – PRICE GUIDANCE ***
Issuer: HSBC Institutional Trust Services (Singapore) Limited
(in its capacity as trustee of First REIT)
Status: Senior, unsecured
Issue Size: TBD
Format/Docs: Issuer’s S$500M Multicurrency Medium Term Note Programme dated 11 April 2013
Price Guidance: 4.375% area, Semi-annual, ACT/365 (Fixed)
Governing Law: Singapore Law
** KEY COMPS
LMIRT 4.88% 2015 @ 103.5 / 3.2%
AAREIT 4.9% 2016 @ 105 / 3.26%
First issue for First Reit which is 22.4% owned by the Lippo consortium, Lippo Karawaci and a couple of funds = strong backing. Mkt cap SGD 934 mio vs MTN SGD 500 mio.
Assets are 12 healthcare related properties = non cyclical and mostly located in the new darling of EM – Indonesia.
Cash flow management has been prudent and stable although secured debt jumped >300% last year to SGD 212 mio, probaby due to the SGD 168 mio term loan facility from OCBC.
They have been on a buying spree buying 2 Indonesian hospitals from Lippo in Mar and 2 more last Nov. Typical I sell you and you sell to me deals ?
I think this bond should sell itself and again, will be a private bank deal with retail investors making up the bulk. Fees offered to bankers are marginally less than Trikomsel.
Not much worries with Lippo 21% share sealed in a convenant for their term loan, which is an overall plus.
Risk ahead would be further expansion plans which would require additional fund raising. Yet this current spread of 5Y + 3.5% is generous enough (5Y interest rate is 0.83/0.81% today).
I was going through the LMRT bonds and realise that they have rallied alot, particularly, the LMRT 5.875% 07/2017 paper which is trading at 106 handle (yield 4.2ish%).
Why not a switch into First Reit ? which looks like a better credit and is yielding more for less than a year difference in maturity ? Switching out of the other Lippos is not a bad idea.
|Issuer Name||Coupon||Maturity||Bid Price||Ask Px|
|LMIRT Capital Pte Ltd||4.48||11/28/17||101.59||102.8|
|LMIRT Capital Pte Ltd||4.88||07/06/15||103.25||103.8|
|LMIRT Capital Pte Ltd||5.875||07/06/17||106||106.5|
Verdict : Buy or switch but do not expect a massive rally. Issue size should be small ie. 50-100 mio and potentially pose liquidity problems in the secondary market.
Is it normal for investors to pay a commission for new bond issue? I was asked to pay 0.5% more
The private bankers are already getting a rebate for selling the bond to you.
However I know of investors who pay more to guarantee an allocation.
The prerogative is yours.
thanks for the reply.. i think smaller fishes need to pay. By the way, what do you see for hyflux 6% perp? apparently on my sheet a few weeks ago, it is still giving about 4.6% YTC
There is no obligation to pay and you should not let the banks get away with it. Only when it is over subscribed, you can offer to bid higher to secure your allocation.
Hyflux is trading on the SGX.
Based on its current exchange offer price of 108 (incl accrued interest), its yield should be 4.25% to call.
Oh, I see.
I thought there is an OTC version of Hyflux perp as well? It is showing up on my OTC list of bonds
Yes. Looks like you have to pay up if you want the First Reit bond.
Books 10 times oversubscribed and coupon guided lower to 4.25% +/- 0.125%
For Hyflux, there is an OTC market but I don’t see anything offered etc. Most of the banks probably dont have the lines to trade this name.
First Reit 4.125% 05/2018 going 100.70/100.80
Hi tradehaven, you think the oxley bond issue is good? thanks
Thank you Sir for your brief write up on Oxley holdings. 🙂
And we have Tata Motors today too !