SGD New Issue Review : Banyan Tree 5Y 5%
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Status: Senior, unsecured
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
Governing Law: Singapore Law
Selling Restrictions: Sections 274 and/or 275 of the Singapore SFA
– Price guidance at 5% area
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.
Graph of Revenue and Net Income
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. http://www.banyantree.com/en/pages/upcoming_destinations
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 ! https://tradehaven.net/market/sgd-new-issues-sembcorp-10-5-years-and-banyan-tree-5-years/
[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).
BANYAN TREE SGD 5YRS – BOOKS IN EXCESS OF 100 MIO
Given BT’s product is a class of its own, it is difficult to transfer guests should they be overbooked and hence the upside yield is capped. I like to be their guest, ask me to be their owner, I believe I have better alternative.
A lot of competition now. Slh.com etc. grouping together little operators and all the other Ayalas and stuff.
They managed to unload Phuket wisely to Europeans and Brits and focus on facilities management. I think there is upside to their model in the current climate. And hearing a new launch next week – mid end stuff.
For their size to survive so many crises till now in their industry, have to applaud a bit. Even if I cannot afford them anymore.
This one should do well, abit of a household name. I stayed at the Angsana Maldives Velavaru, it was lovely and expen$ive.
BANYAN TREE SGD 5YRS
– Expect issue size at SGD100-125mn
– Final Price Guidance: 4.90% +/- 2.5 bps (will price in range)
– Books subject at 3.30pm
– Timing: Will price today
They have their share of enemies over the years including banks, I suspect. Old history.
Banyan Tree 4.875% 2019 100.40/100.75