REVISITING SGD PERPETUALS
Perpetuals are hybrid securities that combines elements of both debt and equity securities.
SGD 1 billion OCBC 5.1% retail pref share maturing on 29 July.
UOB quickly launches the very first SGD bank loss absorbing perpetual in Singapore to replace its own SGD 1.32 bio retail perp maturing in Sep.
Books are heavy as we speak >1 bio. Latent demand emerging from the holders of both perpetuals.
There are only 4 retail tranches of perpetual bonds left. DBS 4.7%, Genting, Hyflux and OCBC 5.1%, the rest are OTC traded.
A quick summary.
We note that some perps are doing worse off than the rest. For instance, Cheung Kong is going at 5.5% mainly because it does not have a coupon refix. Yet Genting is not much better and at least Cheung Kong is a senior paper, which means it ranks along with senior bonds in a time of default. However, for established companies like Cheung Kong, the probability of default is seen as distant and thus, the added comfort does not amount to much.
The senior status of Swiber’s perp is thus more assuring to the buyer but the fear is that given Swiber’s high level of leverage and liens, there will be little left if it does go under.
I notice that local banks have the bad habit of issuing without coupon refixes since 2008 and DBS’s 5.75% issue. Afterall, they have a captive audience of buyers.
This new UOB comes with a refix because it is priced to sell with the new loss absorption feature.
Good luck !
Nice blog. Is the UOB perpetual available for retail investors like Genting? Would it be on offer after September or before?
When I say retail, I mean traded on the stock market.
This one will not be. Min. denomination is 250k.
The spread between ratail and otc is big like DBS 4.7% (106.90 vs 102.25), do you think this is a good time to buy the otc one and what are the drawbacks other than 250k and hard to sell? Also any reason why OCBC 4% is below par (99.25)?
No drawback except that the retail tranche can be sold in odd lots. Both issues are not fungible ie. can be sold interchangeably.
OCBC below par because the new Uob has a coupon re fix. And there is a chance that you could be stuck with 4.7% for life if Ocbc does not call.
Thanks! Just hope the price for DBS 4.7% otc can drop below par or near to par, wonder if this is possible in near future? Where can I find the oct prices other than calling my RM?
Unfortunately, there is no price discovery channel.
We are trying real hard over here to bring up a directory for you and the rest of the people who need it but unfortunately, again, I have been pretty disappointed by a substantial sum to an Australian friend who has not delivered the goods after over a year.
At this rate, it is starting to look slightly futile despite a deep rooted ambition to make the dream come true. Lets keep our fingers crossed for a positive launch soon.
Thanks for your support !
btw, the RM price will likely be way off after factoring in all the charges and commissions in between.
Absolutely spot on unless your RM give your a good deal via married trade
By the way, do recommend to buy this UOB perp or go fish for OTC ones like GLP or even DBS?
True, the price quoted by RM is the “marked up price” and they decided the spreads (profits) based on market conditions. Where did you get the OTC price from?
Thank you so much for your website as it helps layman like me understand more about bonds.
My mum have a Maybank 6% perpetual. She got it from Maybank under recommendation from her RM few years back. She and I have never trade bond. We are thinking of selling. May I know do you have any idea what is its current price and in the event she want to sell, can she get quotes from different banks? What kind of commission is she expected to pay? The bond is in her CDP account now. Thanks for your help and pardon my very basic question as this is the only bond we have.
Many thanks in advance.
Price is looking good.
You can call around the banks you have accounts with or stock broker.
They will probably take a cut especially if they do not have a banking relationship with you or envisage future business.
Probably 1-2 cts… ie. final price to you 105.70 to 106.70.
Let me know what you see.
Thanks for your advise!
Will ask around and see what price I get.
It is a blessing to have your website with the blackbox of bonds trade in Spore.
We try for as long as we can.
The best price I got was from philips security at 107.2. Is this a good price?
In your opinion, is this a good time/price to sell? I am worried about the potential decrease in bond price once Feb increase interest rate.
If you are worried, you should sell.