New SGD Issue Review : CWT 3Y


CWT SGD 3yrs announced
Initial Price Guidance at low 4s
PB selling concession: XX
Timing: This week’s business, as early as today
Comps: CWT 3.9 2019 at 4.62%

Almost a year since their inaugural issue in SGD bond space and we are getting closer to true value.

I do not like to argue with retail folks because they get defensive almost immediately and start telling me that even if they had bought the CWT 6 year at 3.9%, they have earned their 3.9% interest and they are happy with their purchase and their money is still safe, parroting their bankers, who are probably very good at making their clients feel good about themselves.

So I will not say anything bad about CWT whose stock price has fallen a tad ( hearing 300 lots brought down the share price by 7 cts !)  because I am unfamiliar with the company but my comments last year remain.


And I really do not know much about these mid size caps but I do not like it when the new modus operandi is to borrow and borrow and rollover maturities without even ever thinking of repaying debt. This observation is not targeted at CWT which, in my opinion, is better behaved than some other companies out there.

3 year interest rate is 0.855%, so we are getting a coupon that is more than 3% over the base rate.

To put into perspective, the 6Y CWT was priced at 3.9% when the 6 year interest rate was 1.02%.

Today, CWT 3.9% 04/2019 is trading at 4.62% ? When 5 year interest rates are 1.6%.

Which means ?

SELL THE CWT 3.9% 2019 and BUY THIS NEW ONE because they are trading at the same credit spread. Just a thought.

And if the banker is unable to honour the price of the old one, errr, I think the new one should run into similar liquidity problems too. I can vouch that I have not seen a price for CWT 6Y for a long time and it is nearly a miracle that the comparable popped up just because they are marketing a new issue.

If you have a portfolio worth over 30 million in bonds (report says Singapore will have 4,878 of such people by 2023 , perhaps worth considering some. Although it is not a bad buy for a 3 year paper which is proving to be the favoured tenor these days (look at Mustafa).

But if you just want to be fashionable and be able to tell your friends and peers that you are an serious bond investor, names such as CWT and Oxley too, for that matter, will not make you look very intellectual in the eyes of, say, professional investors. Unless it is in the company of wealthy and bored housewives who do not invest their own money, and with whom I have been very fortunate to be acquainted with, I daresay, owning a CWT bond may win me an admiring glance (being very sour grapes here).