SGD New Issues : Sembcorp 10.5 Years and Banyan Tree 5 Years

2 new issues today out of familiar names.

Nov. 18 (Bloomberg) — Person familiar with the matter
• Issuer: Sembcorp Financial Services Pte.
• Guarantor: Sembcorp Industries Ltd.
• Maturity Date: May 27, 2024
• Price Guidance: 3.64% area
• Ranking: Senior unsecured
• Sale Managers: DBS, HSBC
• Person asked not to be identified because the terms aren’t set

Comparable bonds :
Sembcorp 3.7325 2020 current yield 3.09%
Sembcorp 5% Perpetual callable 08/2018 current yield 4.87%

This 10.5 years looks a tad on the tight side to me and obviously taking advantage of the dry spell in the market for GLC names because other than the smallish Mapletree Commercial Trust 8 year back in April and the Capitaland convertible bonds, we have not had any GLCs to hit the street until Sembcorp’s 5% perpetual in August.

Book size SGD 200 million, targeted at institutional clients and oversubscribed at the moment.

Sembcorp has always been the weaker cousin to Keppel and my opinion is that this 10.5 year issue makes the 8.5 year Keppel Corp 3.145% 02/2022 look good at 3.26% or even the 13.5 year Keppel 3.8% 04/2027 at 4.05%.

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Banyan Tree Plans to Sell 5-Year SGD Bonds as Soon as Today

Issuer: Banyan Tree Holdings Ltd.
• Tenor: 5-yr
• Ranking: Senior, unsecured
• Format: Reg S, S274 & 275 of Singapore SFA
• Sale Manager: OSK-DMG
• Timing: As early as today’s business
• Person asked not to be identified because the terms aren’t set

Issue size SGD 50 million and books are in access of 100 mio when I last checked. Revised price guidance 5.35%-5.40%.

Verdict : This is not the cheapest 5 year money they have raised. Pre Lehman, they did a 5 year bond in 2007 at 4.75% which matured last year.

That they have to pay 5.35% for 5 years vs Oxley’s one hit wonder profits (Oxley 5Y at 4.75%), I find very puzzling and can only attribute it to 1. relationships (some people do not like Banyan Tree’s chairman) 2. the company is still on the brink of a turnaround after suffering heavy losses during the GFC, 3. leverage extended due to point 1) and 4. the cyclical nature of their business model.

Some of their resorts, I hear, are aging and face certain competition from boutique set ups. I only remember one tag line in a talk I once attended. That remote and inaccessibility is good because not only is the land cheap, there is no where for the guest to get a bottle of water.

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New Issues : If Oxley & Aspial Can, So Can Banyan Tree ( 23/07/13