SGD New Issue Review : Falcon Energy

FALCON ENERGY GROUP: SGD 3NC2 ISSUE

Issuer:   Falcon Energy Group Limited
Series:  001
Status:  Direct, unconditional, unsubordinated and unsecured Notes
Rating:  Unrated
Format:    Reg S, S274 & S275 of Singapore SFA, issuance off SGD500.0 Million Multicurrency Medium Term Note Programme
Tenor:  3NC2
Initial Price Guidance: 5.50% area
Issue Size: TBD
Issue Date:   [●] September 2014
Maturity Date:  [●] September 2017
First Call Date:  [●] September 2016
Redemption at the
Option of the Issuer: At the aggregate of 100% and half the coupon rate,
in whole and not in part,on the First Call Date or  the fifth interest payment date.
Financial covenants:  In accordance with the Programme
Redemption for Taxation Reasons:Yes, in accordance with the Programme
Use of Proceeds:   In accordance with the Programme
Payment:  Semi-annual, actual/365 (fixed)
Listing/Law/Clear:    SGX-ST/Singapore Law/CDP
Denomination:  SGD250k

– New Falcon Energy Group SGD 3NC2 announced
– Initial price guidance: 5.50% area

Comps:
KRIS ENERGY 6.25% 17 5.00%
PACIFIC RADIANCE 4.3% 18 : 4.40%
NAM CHEONG 5% 17 : 4.20%

Not so sure what a SGD 294 mio market cap company is doing setting up a SGD 500 mio borrowing programme even if it has been around for the last 10 years.

But they are just following the rest of their competitors and borrowing up whilst they can.

Majority owned as usual (almost 80% owned by 1 man) with better than average financials on low gearing, they can certainly afford to borrow up.

Their future is tied to their offshore oil drilling ventures with their strategic partners and their revenues look set to explode in 2014 which makes the stock a very attractive option.

But at 5.5% and a call option in 2 years at 102.25 (assuming a 5.5% coupon), I have a strong feeling many private banks may find it hard to resist.