SGD New Issue Review : Pacific Radiance 4Y 4.5%
NEW ISSUE: PACIFIC RADIANCE LTD. SGD 4YR ISSUE
Issuer: Pacific Radiance Ltd.
Status: Direct, unconditional, unsubordinated and unsecured Notes
Rating: Unrated
Format: Reg S, S274 & 275 of Singapore SFA
Tenure: 4 Years
Issue Size: TBD
Initial Price Guidance: 4.5% area
Redemption at Option of Noteholders upon Cessation of Trading of Shares: At par, in accordance with the Programme
Redemption for Taxation Reasons: Yes, in accordance with the Programme
Payment: Semi-annual, actual/365 (fixed)
Details: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
Listing: SGX-ST
– Comps:
Ezion 4.6 18: 101.50, 4.19%
Dyna Mac 4.25 2017: 101.20, 3.81%
Credit Highlights:
– Listed on SGX with a market capitalization of SGD1,081M as at 21 August 2014, Pacific Radiance Ltd (“PRL”) is a fast expanding owner and operator of a young and diverse fleet of more than 130 offshore vessels in Asia and beyond
– Diverse and modern fleet: PRL operates a diverse fleet which can be deployed across the oilfield lifecycles. Its fleet has an average young age of about four years, which offers a competitive advantage in greater reliability, higher deployment rate and lower maintenance cost
– Access to High Growth & Cabotage-Protected Areas: PRL enters into cabotage-protected markets, such as Indonesia and Malaysia which are among the largest offshore O&G markets in Asia, forming joint ventures with trusted local partners
– Strong Global Customer Base: Blue chip clientele consisting of leading IOCs and NOCs such as BG Group, TOTAL, Shell, Pertamina and Petrobas. In addition, the group also serves large international oil and gas contractors such as Saipem, McDermott and Subsea 7
– Expertise in Ship Building Management: Strong in-house shipbuilding expertise has enabled PRL to manage and supervise vessel construction of its newbuild orders in third party shipyards. This has helped to lower overall newbuild costs
– Strong financial performance: 4-year revenue CAGR at 41.3% and 4-year net profit CAGR at 56.6%. Prudent capital structure with Debt/Asset and Debt/Equity ratios at 0.36x and 0.66x respectively as at 30 June 2014
Owned by the co-founder of Jaya Holdings which was majority sold at the peak to Affinity Equity Partners in 2006, sold at a loss to Deutsche AM consortium back in 2011 and who then re-sold to Mermaid Maritime earlier this year at a almost 100% profit. What a run !
They are back with Pacific Radiance and looking to replicate the Jaya story ?
We cannot make any assumptions about their management or accounts because the company just listed itself in November last year and its share price is up 66.67% since (from $ 0.9 to $ 1.5) which is expected for a 65.37% majority owned by 1 man company.
So I would say it is too early to comment about their prudent debt housekeeping because 1. they just listed in Nov 2013 which means they would do everything right until then and, 2. their MTN borrowing programme is not the 300 or 500 million kiddy ones but it is up to 1 billion in a convenant-light version.
Less than a year into listing, I would expect their numbers to look good. Financial leverage 2.3 times, Debt/Assets 39.3%.
So here we have it, a 4 year paper in the 4% category of Dyna Mac and Tiong seng and Koh Brothers and all our favourite local names. I daresay they would have done their homework and decided that there is enough demand although I would not expect more than 100 mio for them today.
PACIFIC RADIANCE S$ 4YR – BOOKS IN EXCESS OF S$250M
Hi tradehaven, may I ask for new bond issues, what are the main factors will increase the chance of a person to be allocated the bond? For shares, as long as I apply before the closing date, I wont be at a disadvantage during the balloting process. Does it work the same way for bonds too? Or is it the earlier I tell my RM or dealer, the higher the chance of getting it? Thank you so much.
Will look out for the final guidance on the Pacific radiance issue too. Wishing you and your family a lovely weekend ahead.
As far as I know, there is no proper procedure for allocation.
So each person or company’s chances differ. And then there is sub allocation if you did not apply directly to the lead manager bank. Say if you applied through your private bank, the bank would be allocated a lump sum which they would need to sub allocate to their clients.
The only way to increase your chances is if you offer to pay your RM a further commission. Some clients are sometimes generous enough to tell their RM to charge them 101 for the paper or even 101.50 because they are used to equity markets moving in those sort of percentages.
Hi tradehaven, may I seek one more kind advise from you. So far I have not bought SGS Singapore govt bonds thru ATM b4 but I tried doing so for the first time today and was a bit uncertain of the procedure. The one I tried to apply today is a two year sg govt bond which closes tmr.
During the application, I was given two options:
a) competitive
b) non competitive.
For both a) and b) they indicated that the bid price is 1.15 so they will deduct 1150$ from me for 1000 shares.
But for choice a) competitive, I need to key in a yield value also. eg. 3%
I am not quite sure how it works so I quit during the ATM application. May I just check, does it mean
a) if I choose competitive, since I key in the yield, they wont allocate the bond to me unless the bond will give me the yield I key in?
b) if I choose non-competitive, I did not key in the yield so I will just get the bond at max 1.15 directly depending on the final price?
I was actually asking my broker about it but he is not too sure also and asked me to just give it a try. I am so sorry to trouble you with this. Hope I can clarify it so subsequently I can buy the bonds directly from ATM in subsequent bond issues. I am so sorry to be taking up your time to read this. Thank you so much.
Yes.
Competitive means you get the bond if the cut off auction yield falls above or at your chosen yield.
Non competitive means you get the bond at the cut off auction yield whatever it is.
The reason why you have to pay upfront is because the ATM machines are wired that way (for IPOs) and 1.15 is just an indicative price you pay initially with an adjustment made on the settlement date of the bond.
And thank you so much for your previous advise. Cos all the while I only confirm with my RM or dealer quite late part of the day just before books close. It often take me some time to read your review thoroughly and also wait to see if there are quite a lot of people subscribing to the issue b4 I decide. And often I did not get allocated so I thought it is cos I put in the queue too late.. Thank you so much for your explanation again.
Thank you so much for your patience and explanation, I am much clearer now. I supposed for this particular issue, if I had applied, it would be safer to go for competitive cos they are paying less than 4% pa and maturing in two years. If I get it at 1.15, I will be making a net loss of 15% – 8% = 7%.
Very deeply appreciated your kind advise again. Have a great Thursday ahead 🙂
The yield is about 0.51% for 2 years which means you are really better off on some fixed deposit somewhere.
Hi tradehaven, thank you so much for your explanations once again! Thank you so much. Wish you and ur family a great weekend ahead! 🙂
Pac Radiance opened 100.05/100.25
now lower 99.85/100.10
Pacific Radiance 4.3% 08/2018
99.80/100.00
Pacific Radiance 4.3% 08/2018
Closing Price 99.75/100.00