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.


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)
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%.

Stanchart 5Y CDS

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).

Stanchart share price


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.


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.