SGD New Issue Review : Far East Horizon 3.5Y 4.5%
FAR EAST HORIZON LIMITED (BBB-)SGD 3.5YR
– New Far East Horizon SGD 3.5yrs announced post roadshow
– Initial Price Guidance: 4.5% area
– Issue Rating: BBB- (S&P)
– Size: S$ Benchmark
– Timing: As early as today
Comps:
Freshk 4.625 2017 USD – 101.08, 4.27%, Z+ 335bp
Vanke 3.275 2017 SGD – 99.72, 3.36%, Sor + 210
Eximbk 3.375 2017 SGD (BBB-) – 101.00, 3.06%, Sor + 185
Credit Highlights:
– Far East Horizon (FEH) is an industry- focused financial leasing company with leading position in PRC’s financial leasing industry
– FEH has strong and diversified shareholders. FEH is 27.94% own by Sinochem, 17% by KKR, 9% by Cathay life, 7.35% by GIC
– Taking advantage of China’s continuous economic growth, Far East Horizon is dedicated to China’s eight pillar industries including healthcare, education, printing and infrastructure construction etc.
3.5 year interest rates 1.25% which gives us a premium of 3.25% for this bond, a tad tighter than Golden Agri’s 3 year paper.
(Although I am now hearing that Golden Agri is going lower at 4.25%)
Their USD 3 year (not 3.5 year) paper is going at premium of 3.25% as well which means they are not short changing investors.
I am not familiar with Chinese leasing companies but I suppose, in the wake of their financial turmoil, the big ones should be sound especially if they sell a lot of bonds to raise money in Singapore that they may otherwise have difficulty borrowing onshore.
A point to note is that most of their financing is secured which does not give a lot of comfort to senior bond holders and they have USD 3.4 bio in outstanding debt with 0.5 bio maturing this year and another 1.35 bio in 2015.
At 4.5% for 3 years and a BBB- rating with a recent Stable outlook in Jan 2014, this issue should be well taken up.
Thanks TH, I thought it was fairly comparable to GA too. Its also a nice profitable coy with growth momentum. Most banks are offering Leverage as well given the BBB rating.
FAR EAST HORIZON SGD 3.5YR BOOKS OVER SGD750m
Totally different business model which warrants the yield difference and remember, you are subordinated even though you are a senior bondholder.
Thanks TH. Fair point on the subordination.
Far East Horizon books now > SGD 4 bio
Priced 4.3% SGD 400 mio.
Current mkt price 100.55/100.60