SGD Corporate Bonds – You Call This Junk ?

Do not jump the gun. The S$5bn high yield deals mentioned in the Singapore – Destination Junk article are mostly in the USD arena even if they were originated in Singapore. Stuff like the Vedanta Resources Plc (BB/Ba3) 6% 2019 USD 1.2 bio issue already covers 25% of the S$5 bio.

http://finance.yahoo.com/news/singapore-becomes-destination-junk-061716943.html

What a wonderful idea, I thought. Far sighted indeed. Originating in Singapore would also boost the legal industry by leaps and bounds during default litigation, arbitration and what not. We would need more lawyers and more bankers, create jobs for their army of assistants.

It got me to thinking what would pass off as junk in SGD space. If Vedanta is trading at 7% in its own right as a GBP2.8 billion company rated BB/Ba3 and listed in London, our little Mencast and beloved Oxley’s have it so good, don’t they ?

Not only do they pay near investment grade coupons and get away with it, customers ask for more of the same and we have Oxley re-openings !!

These are USD high yield.

COUPON MATURITY MID YIELD
BANK RAKYAT INDONESIA 2.95% 2018 4.5 BB+ Baa3
PT ADARO INDONESIA 7.63% 2019/callable 6 N.A. Ba1
INDOSAT PALAPA CO BV 7.38% 2020/callable 5.75 BB+ Ba1
COMFEED FINANCE BV 6% 2018/callable 7.8 BB- N.A.
LONGFOR PROPERTIES 6.75% 2023/callable 7.7 BB Ba2
AGILE PROPERTY HLDGS LTD 9.88% 2017 6.9 BB Ba2
COUNTRY GARDEN HOLDINGS CO 7.50% 2023/callable 7.9 BB- Ba2
SHIMAO PPTY HLDNG LTD 6.63% 2020/callable 7.2 BB- B1
EVERGRANDE REAL ESTATE 13% 2015 6.6 BB- B2
SUNAC CHINA HOLDINGS LTD 9.38% 2018/callable 9.1 B+ B1
CIFI HOLDINGS GRP 12.25% 2018/callable 10 B B2
CITIC PACIFIC LIMITED 6.80% 2023 7.75 BB Ba1
CHINA SHANSHIO CEMENT 10.50% 2017/callable 8.15 B+ N.A.
WEST CHINA CEMENT 7.50% 2016/callable 7.15 B+ B1
MIE HOLDINGS CORP 6.88% 2018/callable 9.25 B+ N.A.
FUFENG GROUP LTD 7.63% 2016/callable 6.65 BB N.A.
VEDANTA RESOURCES PLC 6% 2019 7 BB Ba3

These are what I would categorise as high yield in SGD space for the issues this year. I consider their market cap and issue size in my rough assessment. Do note that this is a personal assessment and not a formal categorisation.

SGD HIGH YIELDSWhat high yield ? They are trading respectably for some lack of liquidity.

This is written from a personal investment perspective and when I read things like this below, I feel a sense of tragedy for the market.

“Foreign names come to Singapore because they know it is a viable and accessible market,” said a syndicate head of a foreign bank. “The Singapore bond market is still substantial, and getting along quite healthily despite the last few months of volatility.”

Viable and accessible = ignorant and uninformed and unsophisticated ?

substantial = alot of fools and their money to be parted ?

getting along quite healthily = illiquid so no one can sell and prices remain stable ?

Excuse me for being a tad cynical.