SGD New Issue Review : Banyan Tree 5Y 5%

Foreword :
Bringing the latest news in bonds and providing market information is not easy and Tradehaven strives hard to accomplish that for our readers.
If you like our articles and stories, do contribute to our site to keep it going.
The button is located on the left side of our home page.

Issuer:  Banyan Tree Holdings Limited
Status: Senior, unsecured
Rating: Unrated
Issue Size: TBD
Distribution: As per Information Memorandum, primarily Singapore  selling restrictions Under Section 274/275 of SFA
Format/Docs:  Reg S Bearer / Issuer’s SGD 400 million Multicurrency Medium Term Note Programme
Price Guidance: 5% area, semi-annual, ACT/365 (Fixed)
Tenor: 5 Year
Issue Date:  [?] 2014
Maturity Date:  [?] 2019
Denomination: SGD250K
Governing Law: Singapore Law
Listing:  SGX-ST
Clearing:  CDP
Selling Restrictions:   Sections 274 and/or 275 of the Singapore SFA
– New Banyan Tree SGD 5yrs announced on the back of strong reverse interest
– Price guidance at 5% area
Comparable Bond
BTHSP 5.35% 11/26/18 @ 102.5 / 4.72%


At one point I really thought this company was done  with. Sometime in 2009 when with its stock price at its lows and they had all those work in progress villas to sell. I heard they even had to pay staff in vouchers which I DID NOT take advantage of, by buying off someone, booking 3 nights to stay with 50% off food and drinks.

Then there was that Thai trouble back in 2010 which affected business.

Those days are over and I am impressed by their turnaround. No doubt the world of luxury resorts have changed and they are facing intense competition from global and regional players, I am glad to see them lying low in the past year and spend time refurbishing.

Revenue growth not impressive but the debt is not growing too, fortunately.

banyan tree revenue and incomeGraph of Revenue and Net Income

banyan tree total liabilitiesGraph of Total Liabilities

They have a big pipeline coming up for next few years, largely concentrated in CHINA which I believe, they should have first mover advantage and experience on their side as compared to their competitors.

The outlook remains bleak for China and Thailand for that matter. With the crack down in spending for the Chinese and Thailand’s political instability.

I am consoled by the fact that in their segment, the MARGINS ARE HUGE because the cost of operations is not really a problem in far flung places where staff is cheap and inefficiencies can be part of the rustic charm.

Back to the price. 5 year 5% ? Probably not that appealing to the private bank customer.

Come on, they just did a 5 year paper in Nov 13 for 5.35% (now 4.72%) and paid 5.75% for 5 years in Jul last year !

[I note with certain glee that the Oxley 5 year bond issued at 4.75%, along with Banyan Tree in Nov is now trading at 99.20/99.50 5.15/5%]

5 year interest rates are higher now than in November but credit spreads have compressed globally.

I see institutional interest in this bond and Banyan has a few fans these days, including me, a one time skeptic.

Besides, with that pipeline of new resorts to launch, we should be seeing them tap the market again (total MTN size SGD 400 mio, current bonds outstanding SGD 170 mio).