SGD New Issue Review : ASL MARINE SGD 4YR


– New SGD 4YR transaction announced at 5.5% area
– Expected issue size: SGD50 million
– Timing: As early as today

ASL Marine 4 ¾%  03/28/17    100.00  4.75%
Dyna Mac  4 ¼%   08/01/17   101.375  3.73%
Pacific Radiance 4.3% 08/29/18     99.85  4.34%
Nam Cheong  5.05% 08/26/19    100.30 4.98%
Ezion  4.6% 08/20/18     101.50 4.18%

I find it a joke that you have a bond issue, its price disappears and there is no liquidity for 18 months and then when they need to tap the market again, the secondary price miraculously surfaces.

What I wrote last year :

Nothing much has changed about ASL Marine since March last year when they launched an inaugural bond issue and we cannot really expect them to be regular issuers because they are not expanding as quickly as Swiber and gang who seem to be specialising in listing off subsidiaries so that the subsidiaries can go forth on a mission of borrowing.

One interesting observation though, is that Fidelity Research and Management (Yes, the American FIDELITY) has upped their holdings in this SGD 256 mio market cap company to 8.02% (from 5% prev)  in April this year.

I can understand why. There is no funny business of selling assets to subsidiaries and buying shares of another and then listing off others.

Note Swiber 6.5% 08/2018 is indicating 99.75 6.57% today.

Yet ASL Marine, like all the small marine companies out there, are highly susceptible to income fluctuations. In the case of ASL, the recent earnings report has been disappointing due to the cancellation of a vessel order due to a delay that resulted in a loss for them for the next quarter.

When ASL Marine did their 4 year issue last year, the 4 year interest rate was 0.75%. The 4 year rate now is double 1.575% and the credit spread is roughly constant.

I am neutral at this unexciting  coupon given that the company is not too over leveraged indicating prudent management. The risk remains of a widespread industry slow down and more order cancellations but I suspect that some companies will be able to weather through better than the rest.