Bonds In Conversation : War Games

29/08/2013 by

An interesting observation from the recent wars is that they start in March.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08-2/20130828_war.jpg

So the west is going to war with Syria/Russia.

https://tradehaven.net/market/ad-hoc-commentary-the-many-short-term-benefits-of-restarting-the-cold-war-through-syria/

India is grappling with a currency war this week, new announcements daily with the latest being the window for USD for the state oil companies which led to a life time high close of 68.80 instead of the intraday high of 70.00.

http://www.marketwatch.com/story/indian-rupee-plunges-to-record-low-2013-08-28?link=sfmw

No signs of corporate distress anywhere even as issuance falls.

“Global corporate bond issuance at lowest level in five years. … putting it on course to be the weakest month since 2008” Source : FT

www.ft.com/cms/s/0/4e464782-0bfc-11e3-8f77-00144feabdc0.html

Investors are stockpiling instead of trading as banks withdraw liquidity from the market and secondary volumes fall. It is interesting to note that this phenomenon last occurred 2 months before the Lehman crisis.

A crisis looks remote at the moment. But an extended period of lagging growth is looking like the inevitable future. Nonetheless it does not make bonds a buy primarily because liquidity conditions are likely to fade back to normal as central banks realise the ineffectiveness of QE.

SGD Corporates At A Glance

Selling observed. Some bonds worse than the rest, in particular the perpetuals which were hit as banks’ bids vanished which probably saved the market from further losses because there is no one left to sell to.

Today we have Hiap Hoe 3Y coming at high 4%. Buyers better be buying to keep.

In any case, buyers be warned. Citi has just raised their risk free benchmark for S Reits evaluation to 3.1% from 2.2%. The repercussions on fixed income will follow through.

Leaving you with the prices which look like a mess to me and hardly reliable.

2012 BONDS

Category : Market, Rates/Bonds

Tags : AACI REIT 4.35% 12/2019, AACI REIT 4.9% 08/2016, ABN AMRO BANK NV 4.7% 10/2022, ASCEN, ASCENDAS 4.75% PERPETUAL, ASCENDAS REIT 4% 02/2022, ASCOTT CAPITAL 3.78% 08/2019, ASL MARINE 4.75% 03/2017, ASPIA, ASPIAL 5.2% 07/2015, ASPIAL 5% 07/2016, BANK OF EAST ASIA 4.25% 09/2022, BANYAN TREE 5.75% 07/2018, BANYAN TREE 6.25% 05/2017, BIOSENSORS INVESTMENTS 4.875% 01/2017, CAMBRIDGE MTN 4.75% 03/2015, CAPITALMALLS ASIA 3.8% 01/2022, CAPITAMALLS ASIA 3.7% 08/2022, CATHAY PACIFIC 3.25% 02/2017, CATHAY PACIFIC 3.25% 05/2017, CDL 2.45% 03/2018, CDL 2.78% 09/2018, CDL 3.38% 03/2019, CDL 3.48% 04/2023, CDL 3.75% 07/2022, CDL HOSPITALITY REIT 2.5% 06/2018, CENCHI 10.75% 04/2016, CMT 3.75% 08/2024, COURTS ASIA 4.75% 05/2016, CWT 3.9% 04/2019, DAH SING BANK 4.875% 02/2022 SUB, DBS 3.3% SUB 02/2022, DBS BANK SUB 3.1% 02/2023, EU YAN SANG 4.1% 06/2018, EXIM BANK INDIA LONDON 3.375% 09/2017, EZION 4.7% 05/2019, EZION 5.25% 05/2015, EZION 7.8% PERPETUAL, EZRA 4.875% 04/2018, EZRA 5% 09/2015, EZRA 8.75% PERPTUAL, FCL 3.7% 04/2019, FCL TREASURY 3.8% 06/2022, FIRST REIT 4.125% 05/2018, FREIGHT LINKS 4.6% 05/2017, GENTING SINGAPORE 5.125% PERPETUAL, GENTING SINGAPORE 5.125% RETAIL PERPETUAL, GLP 5.5% PERPETUAL, GOODPACK 4.15% 08/2018, GOODPACK 4.25% 01/2016, GOODPACK 4.5% 10/2019, GOODPACK 4.7% 04/2023, GOODPACK 4.7% 06/2017, GOODPACK 4.75% 01/2023, GOODPACK 5, GUOCOLAND 4.1% 05/2020, GUOCOLAND 4.25% 02/2015, GUOCOLAND 4.35% 09/2017, GUOCOLAND 4.7% PERP, GUOCOLAND 4.75% PERPETUAL, GUOCOLAND 4% 11/2014, GUOCOLAND 5% 02/2017, GUTHRIE GTS 3.7% 01/2018, HDB 0.76% 11/2015, HDB 0.943% 03/2016, HDB 1.105% 02/2017, HDB 1.11% 08/2017, HDB 1.165% 07/2016, HDB 1.368% 05/2018, HDB 1.52% 06/2019, HDB 2.088% 08/2022, HDB 2.505% 06/2024, HDB1.23% 01/2018, HENDERSON LAND 3.65% 02/2016, HONG FOK 4.75% 01/2018, HONG KOK 4.75% 01/2018, HPL 3.9% 04/2020, HPL 3.95% 09/2019, HPL 6.125% PERPETUAL, ICICI DUBAI 3.65% 01/2020, INDIAN OIL CORP 4.1% 10/2022, KEPPEL CORP 3.145% 02/2022, KEPPEL CORP 3.8% 04/2027, KEPPEL CORP 4% 09/2042, KEPPEL LAND 3.8% 06/2022, KEPPEL LAND 3.9% 11/2024, KEPPEL T&T 2.625% 08/2019, LEND LEASE FIN LTD 4.625% 07/2017, LMIRT CAPITAL 4.48% 11/2017, LMIRT CAPITAL 4.88% 07/2015, LMIRT CAPITAL 5.875% 07/2017, MAPLETREE COMMERCIAL 3.2% 04/2021, MAPLETREE COMMERCIAL 3.6% 08/2020, MAPLETREE INDUSTRIAL TRUST 3.65% 09/2022, MAPLETREE INDUSTRIAL TRUST 3.75% 03/2019, MAPLETREE LOGISTICS TRUST 5.375% PERPETUAL, MAPLETREE TREASURY 5.125% PERPETUAL, NAM CHEONG 6% 11/2015, NAM CHEONG SGD 5% 08/2017, NOL 4.25% 04/2017, NOL 4.4% 11/2019, NUS 1.038% 01/2018, OCBC 4% PERPETUAL, OLAM 5.8% 07/2019, OLAM 6% 10/2022, OLAM 7% PERPETUAL, OUE 4.25% 10/2019, OUE 4.95% 02/2017, OXLEY 4.75% 07/2018, OXLEY 5.1% 05/2017, PCRT 5.25% 07/2016, PCRT 6.375% 09/2015, RAFFLES EDUCATION 5.8% 02/2016, RAFFLES EDUCATIONI 5.9% 05/2018, SBS 1.8% 09/2017, SEMBCORP INDUSTRIES 5% PERPETUAL, SHUI ON DEVELOPMENT 8% 01/2015, SINGAPORE CORPORATE BONDS, SINGAPORE POST 4.25% PERPETUAL, SMRT 1.2% 10/2017, SMRT 2.363% 10/2022, SP POWERASSETS 3.4% 09/2032, STARHUB 3.08% 09/2022, SWIBER 6.25% 06/2015, SWIBER 6.5% 08/2018, SWIBER 7.125% 04/2017, SWIBER 7% 07/2016, SWIBER 9.75% PERPETUAL, TAT HONG 4.5% 07/2018, TATA COMMUNICATIONS 4.25% 02/2016, TATA STEEL 4.95% 05/2023, TML HOLDINGS 4.25% 05/2018, UBITECH HUB 4.2% 06/2017, UNITED ENGINEERS 4.2% 01/2017, United Envirotech 3Y SGD 7.25%, UOB 3.15% SUB 07/2022, UOB 4.9% PERP SGD, UOL GROUP 2.493% 05/2015, UOL GROUP 3.043% 05/2017, VTB, VTB BANK 4% 07/2015, WHEELOCK MTN 3.5% 12/2014, WILMAR 3.5% 01/2017, WILMAR 4.1% 01/2019, WING TAI 4.5% 09/2022, WING TAI PROPERTIES 4.25% 11/2022, WINGTAI 4.25% 03/2023

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5 thoughts on “Bonds In Conversation : War Games”

tradehaven on 29/08/2013 at 7:02 PM said:

HIAP HOE LIMITED SGD 3YR PRICED AT 4.75%
JC8888 on 29/08/2013 at 8:23 PM said:

Responding to your “Bonds in Conversation – War Games” posting of earlier today, for which thanks Tradehaven.

I can’t overstate the value that your transparency push is bringing to readers of your website Tradehaven – excellent stuff – I really like your removal of the mystique about SG Bonds, particularly your weekly “Bonds in Conversation” pieces.

A couple of totally unrelated things ……………

I’m intrigued and perplexed as to why Trikomsel’s 5.25% paper hasn’t been hit harder in recent times – given its Indonesia focus etc. and seemingly endless erosion of the Rupiah’s worth. It seems to be holding its price in the 99’s – its one that has always interested me (I couldn’t get in at the initial issue – zero allocation – may be that wasn’t a bad thing) but I find the ~ 5.5% yield based on today’s price doesn’t justify the Indonesia related risk. May be its the remaining tenor (< 3 years)? Or may be I'm missing something as usual?

My RM called this morning enquiring about my potential interest in the Hiap Hoe 3 year paper – he said that he believed the issuer was aiming to push down the coupon to the low 4's before closing the books. I stayed clear – and sorry, I don't know where the coupon ended up
…………. but if it did indeed end-up in the low 4's, I suspect Wing Tai's 4.25% is a better punt, given it is trading in the 97's now. Also looking again at Hong Fok – still seems a bit pricey and suspect this is down to their loyal, traditional following. I have been consciously light on the paper of local property focused counters based on a hitherto (incorrect) belief that the local Singapore property market was in for a correction.

Onwards and …………..?
tradehaven on 29/08/2013 at 9:46 PM said:

Hey, you spotted an error. Trikomsel is 91.50/96.50 ! Have rectified it on the table.
Bonds are quoted wide now and I am hearing names like the recent United Envirotech quite price-less out there i.e. no price.
Liquidity is drying up and prices will be wide especially for the more obscure names so you did well to avoid Hiap Hoe.
And a local property mogul did say it was suicide to buy Singapore land now.
JC8888 on 29/08/2013 at 10:23 PM said:

In truth I didn’t spot an error Tradehaven – I was genuinely unaware the quotes for Trikomsel’s 5.25% paper were a) so low and b) so darn wide!! Any way, your “updated” pricing information is much appreciated and it makes more sense now.

I’m wondering if a 92’ish offer for one lot of Trikomsel will do the trick!? Even though that should correspond to a yield of not far shy of 8.5%, I emphasise one lot only! But there again, a trusted banker chum advises me that he thinks the 3R’s (as he now refers to them – I thought he was referring to the basics I was supposed to learn from my old fashioned but extremely able teacher at the infant school I attended oh so many years ago) – the 3R’s of Rupiah, Ringgit and Rupee, are going to get worse, and worse by a chunk, before they get any better. My banker chum is a rather dry, sober type by the way; DM over EM any day in his book. But I may wait a bit before even a low-ball offer! No need for haste.

Seriously, my RM tells me his bank aren’t interested in putting any low-ball offers in for any bond with wide quotes. At times, I do wonder if the banks are really looking after the interest of their clients.

Do you know where Hiap Hoe’s coupon ended up?

All the best
JC8888
- tradehaven on 29/08/2013 at 10:33 PM said:
  
  Haha. I am nearly sure you will get your 92 if you ask for it. Just leave an order with the lead.
  That is the problem with the banks these days. They know how to sell but where are they when you need them to buy ? Short sighted indeed (speaking from experience).
  Hiap Hoe came at 4.75%. Lucky them.

TradeHaven

Bonds In Conversation : War Games

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5 thoughts on “Bonds In Conversation : War Games”