SGD New Issues Reviews : Stanchart Sub 12YNC7 4.5% and Ezion 5Y Senior and Maxicash VRN !!!
New issues come out to prance and caper,
While rates behave before the Taper.
Croesus 4.6% 01/2017 is trading at 101 and Hyflux 5.75% perp sold off from 100.40 to 100.05 this morning.
NEW ISSUE: STANDARD CHARTERED PLC SGD 12 Non-Call 7
Standard Chartered PLC SGD 12 Non-Call 7 Callable Fixed-to-Fixed Rate Dated Subordinated Tier 2 Notes
ISSUER: Standard Chartered PLC
ISSUER RATINGS: A2/A+/AA- (M-Stable/S-Neg/F-Stable)
EXPECTED ISSUE RATINGS: A3/A-/A+
ISSUE TYPE: Dated Subordinated, Tier 2 Capital
FORMAT: Reg S Bearer Notes
CURRENCY: Singapore Dollar (“SGD”)
SIZE: SGD Benchmark
TENOR: 12 Non-Call 7 years
INITIAL GUIDANCE: 4.50% area
ISSUER CALL DATE: 23 January 2021, one time call
INTEREST BASIS: Fixed rate (semi-annual in arrear), single coupon
reset in year 7 if not called on Issuer Call Date
COUPON: Fixed at [ ]% until Issuer Call Date. If not
called on Issuer Call Date, coupon resets to the
prevailing 5-year SGD Swap Offer Rate (“SOR”) plus
the Initial Spread
SETTLEMENT DATE: 23 January 2014
FINAL MATURITY: 23 January 2026
DENOMS: SGD250,000 minimum / SGD250,000 increments
EXPECTED LISTING: London (listing to follow settlement)
CLEARING SYSTEM: Euroclear Bank / Clearstream
GOVERNING LAW: English Law
SOLE LEAD MANAGER: Standard Chartered Bank
TIMING: Today’s business
Current indic 7Y SOR: 2.29%
Thoughts :
Things they did not tell you – There is a loss sharing clause at the discretion of the regulator ie. Bank of England even though this is a Tier 2 paper. It is not the same as the perpetual’s CoCo structure whereby there is a deterministic call when capital ratios fall below the target level.
Stanchart has USD 4.87 billion worth of debt maturing this year. This bond is issued at the group level i.e. Stanchart Plc, which subordinates to the Stanchart bank issued papers.
A 7 year call avoids direct comparison to the local bank perps issued last year – the DBS Group 4.7% (5 year call) and the UOB Bank 4.75% (6 year call) and 4.9% (5 year call) perpetuals.
The Stanchart 7Y EUR subordinated debt credit default swap level is trading near its 3 year low at 1.68% which is equivalent to SGD 2.1%, thus this bond is coming out pretty close at 4.5%-2.29% = 2.21%.
There is no step up during the coupon refix after 7 years which is a bummer. But the biggest qualm of all is the fact that Stanchart is seen as less “systemically” important in the UK, being an emerging markets bank and as such, there is a bias to reason that the regulators may not be as “protective” as they would for another name.
Some secondary levels (under old rules).
1. Stanchart sub 4.15% 10/2021 (call 2016) SGD 750 mio indic yield 2.55%
2. Stanchart sub 5.25% 04/2023 (call 2018) SGD 450 mio indic yield not available
3. ABN Amro NV sub 4.7% 10/2022 (call 2017) SGD 1 bio indic yield 3.80%
4. DBS sub 3.1% 02/2023 (call 02/2018) SGD 1 bio indic yield 2.86%
5. UOB Bank sub 3.15% 07/2022 (call 07/2017) SGD 1.2 bio indic yield 2.60%
6. DBS sub 3.3% 02/2022 (call 02/2017) SGD 1 bio indic yield 2.72%
Having said all that, I expect Stanchart is testing the waters with this issue because it is going to be a long year for them and we should see a Tier 1 and many other issues before long just looking at their stock price. And this SGD issue is likely to go down well as I am hearing 70% leverage available to buyers. Finally, as this is a semi professional sort of website, we will not speculate on the rumours of takeover (note the blip in stock price this year).
NEW ISSUE: EZION HOLDINGS LIMITED SGD 5YR ISSUE
Issuer: Ezion Holdings Limited
Status: Direct, unconditional, unsubordinated and unsecured Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenure: 5 Years @ high 4% whisper
Issue Size: TBD
Payment: Semi-annual, actual/365 (fixed)
Details: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
Listing: SGX-ST
Everybody loves Ezion. Just look at this share price and I am not really interested in cross holdings. They may not pay your dividends but they pay you back handsomely in capital gains.
Healthy company with good accounts and amazing revenue growth as they keep growing and its no wonder they need to raise funds when their assets doubled between 2012 and 2013.
Comparables :
Ezion 5.25% 05/2015 indic yield 2.67%
Swiber 6.25% 06/2015 indic yield 4.98%
Ezra 5% 09/2015 indic yield 4.2%
Swiber 9.75% Senior perp callable 09/2015 indic yield 13.05%
Ezion 7.8% perp callable 09/2015 indic yield 6.14%
Swiber 7% 07/2016 indic yield 5.58%
Swiber 7.125% 04/2017 indic yield 6.17%
Ezra 4.875% 04/2018 indic yield 5.23%
Ezion 4.6% 08/2018 indic yield 4.32%
Ezion 4.7% 05/2019 indic yield 4.66%
Ezion new 5Y at high 4% is just a another regular issue, if we look at their 2019 paper. I guess for shareholders who feel a little tired of the capital gains they have been earning, they could look at something more stable for a change.
NEW ISSUE: MAXI-CASH SGD VARIABLE RATE NOTES
Issuer: Maxi-Cash Financial Services Corporation Ltd.
Status: Senior, Unsecured Variable Rate Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenor: 3 Years
Issue Size: TBD
Coupon: 1.70% p.a.
Payment: Quarterly, actual/365 (fixed)
Issue Date: 4 February 2014
Interest Period: 3 months
Put Option: Puttable by investors at end of 3 months
Call Option: Callable by Issuer at end of 3 months
Redemption Month: [*] February 2017, if not previously redeemed or purchased and cancelled
Details: SGD250K/MTN Programme/Singapore Law/CDP
Maxicash is the dream of all the money lenders and pawn shops out there. Shadow banking at its pinnacle.
Everybody who is in the lending business would love to be able to borrow at 1.7% unsecured legitimately and lend out at 20%, secured on someone’s bike or watch or stove or flat.
VRNs grew out of favour because of the high costs of running the programme but I guess their bankers probably feel more secure selling it to investors than lending money to them directly ? Or are we going to see an explosion of growth in the pawn shop business ahead with ValueMax coming into the marketplace ?
Relatively low risk 3 month alternative to fixed deposits yet I know an enterprising chap who has set up his own money lending business and getting way better returns than that. Maybe he should IPO too. Long live shadow banking !
Verdict : None.
Thank you for the alert on the loss sharing clause and it is issued at group level.
Hi Tradehaven, what are your views on Stanchart Sub 12YNC7 4.5% compared to the recent local local banks perps?
Hi Tradehaven, thank you so much for your views, insights and updates again. You mentioned the new Hyflux perp was sold off around 100.05 to 100.4 in early trading. May I just ask, do you have any idea how price changed later part of the day? You have any idea what is the bid and ask for the old Hyflux 6% OTC perp after they launched the new one? I am wondering if it is badly affected.
Hi Tradehaven, there is a news report in BT two or three days ago saying that ANZ is considering to buy over Stand Chart. May I ask, if the take over does materialise, how will it affect the StandChart bonds? Am I correct to think that it should not affect any of the fixed deposits etc in SC or bonds/equities held in custodian accounts of SC? Just seeking some reassurance. Thank you so much.
Do not think there is a clause for takeovers for bond holders to put back their holdings. In any case, ANZ is a good credit.
As for the bank accounts, I think they are covered under the books.
Hi tradehaven, can I just ask do you have any idea how is the subscription like for the Hyflux 5.75 perp? Is it just marginally oversubscribed 3+ million or quite oversubscribed in the, say, 6 million range? I tried looking for details on this issue but there is not much info available. Many thanks
Hyflux books were over SGD 500 mio (unverified)
Secondary Levels :
Hyflux 5.75% Perp last done 100/100.20
Stanchart 4.4% 01/2021 100/100.10
Croesus 4.6% 01/2017 100.80/101.00
Hi tradehaven, thank you so much for the secondary prices and the various updates. Very deeply appreciated it. Do you happen to know what is the secondary price for Hyflux 6% perpetual (OTC, institutional tranche) currently? I am wondering how did the new 5.75% paper affected the price of old hyflux 6% OTC tranche. The retail tranche is slightly affected only, so far down from 108 to around 107.2+, not sure about the OTC tranche.
The Hyflux 5.75% is currently at 100/100.2 as mentioned above. I am wondering if it is likely for the price of hyflux 6% OTC to move down slowly to 100/100.2 (current price of 5.75% paper) or is it more likely for the 5.75% price to move up slowly to the 6% perpetual price?
I am quite keen in getting this Hyflux 5.75% paper but just that I already have the 6% paper and I feel a bit uneasy to hold too much perp of the same company.
Hope to hear from you. Thank you so much once again.
Hi Oldfolk,
The price for the Hyflux 6% looks like 104.25/105.00 (4.88/4.66). I am not sure if its put there to look pretty or it works.
But it is still far off the stock market price which is much higher.
The market price of the new Hyflux 5.75% is still around 100. So a switch may be logical.
Good luck.
Hi tradehaven, what are the prices for Stanchart Sub 12YNC7 4.4% today?
I understand its 100/100.3 today. Is Hyflux still at 100/ 100.2?
Tradehaven,
I refer to your statement “Things they did not tell you – There is a loss sharing clause at the discretion of the regulator ie. Bank of England even though this is a Tier 2 paper.”
From my understanding, all subordinated papers issued by European banks will be subject to this Regulatory discretion in the event on non-viability. Thus, in my view, it is nothing serious.
Even if it is a true ‘old style’ LT2, the regulator can still impose losses on the bond holders without having to liquidate the Issuer.
Let me know your thoughts.
P.S. I entered into the SCB 4.4% bond during IPO fully aware of this clause as I did not think it to be a big deal.
P.P.S. Current price is 100/100.3 before markup.
Cheers,
Newbie
Can share how many lots did you get and from where (bank or broker)? I tried 1 lot from a bank but did not get any allocation.
Hi Newbie,
You are right this “new style” has a formal clause but the “old style” has the same risk.
The angle to look at it is in the systemic risk Stanchart poses to the system, which is pretty small and therefore, one might think it is easier for the regulator to decide on the loss sharing, minus the Temasek element (ie. if they would step in, even if they are not a majority stakeholder).
Glad for you that you find the price and spread acceptable.
And btw if you are buying more, the price is 100.02/100.07 now. Don’t let them tell you its 100.30 on the offer.
Good luck.
I got 50% allocation using one of my private banks.
Tip for u: stock brokers get leftovers. Go for private banks which give better allocation. Especially the big players.
Agree with you that Stand Chart is ‘seen as less systemically important than other banks’ by its home regulator.
Whereas within Singapore’s domestic banking system, Stand Chart is probably systemically important? Also SWF Temasek is its biggest single shareholder with 18%.
Does this impact the pricing?
dont agree with scb being strategically impt due to the swf stake…ownership does not equate to systematic importance…although the inverse normally translates into ownership (SG & China banks for a start)
Anyone knows the prices for Stanchart4.4% today and can this bond be transferred to CDP?
Hi Lim,
The price is still around 100. Hearing 100/100.15 range.
This bond is Euroclear and Clearstream. I do not think it is possible for CDP to custodise for the individual.
Good luck.
Price for SCB 4.4% seems to be moving up. I’m hearing 100.3/100.5 now.
Tradehaven can confirm?
Yes. Your levels look correct.
Hi tradehaven, what are the prices for the recent SGD bonds like Hyflux 5.75%, DBS 4.7%, UOB 4.75% (Your price guide last updated was 17 Jan)? Thanks!
SCB SGD 4.4% 100.6/100.8 now…
limpoop want to buy 1 lot from me at 101 now? we do as security transfer no need to pay RM any commission! haha
(the above is a joke, i don’t intend to sell this gem)