SGD New Issue Review : Far East Horizon 5Y 4.5%

FAR EAST HORIZON

– Far East Horizon SGD 5yrs announced
– Initial price guidance: 4.5% area

COMPS:
Far East Horizon  4 ¼%  10/17  101.75  3.64%
PINGIN 4 ⅛ 09/06/19  101.65/3.76%

Far East Horizon is on a roll !!

After their inaugural SGD issue back in April, they have since issued 6 more papers to plug the funding gap left from the shadow banking freeze in China.

3 HKD issues, 1 AUD issue, 1 USD issue and their latest CNY issue.

Far East Horizon USD 200 mio  perpetual callable 06/2017 101.45/102.05 4.97/4.74%

Far East Horizon AUD 200 mio 08/2019 102.25/103.00 5.58/5.41

This is a BBB- rated company and the main reason they are back is because they probably did not enjoy the success that they did in Singapore back in April when the order books for their 3.5 year paper, which was indicating 4.5% back then, swelled to >SGD 4 bio for a SGD 400 mio issue ! Compared to the pitiful amounts they managed to sell in Hong Kong subsequently, I say Singapore will be their favourite fund raising centre for the year.

Credit highlights and some of my comments from the last issue : https://tradehaven.net/market/sgd-new-issue-review-far-east-horizon-3-5y-4-5/

I would like to point out that their debt profile is still looking dangerous despite their bond issuance spree.

FRESHK DDIS

We are looking at another HKD 10 bio of funding requirements next year and their Interest expense is catching up on their earnings. (But that should not be a problem if they keep coming to Singapore)

freshk ebita

My other gripe is that their credit premium has fallen considerably since April.

The current 5 year interest rate is 1.85%. At a coupon of 4.5%, we are looking at a premium of 2.65%.

This is compared to the premium of 3.05% they paid for their 3.5 year paper back in April which is shorter than 5 years that is trading at about 2.30% premium today.

Nonetheless it is what the current market is trading at and if bond investors are willing buyers at 2.3% for 3.5 years (and WERE WILLING TO BUY GUOCOLAND 5 YEAR YESTERDAY AT A PREMIUM OF 2.1%), then there is no problem here.

My conclusion : A beautiful coupon number that should attract another swarm of investors especially those thankful that they were not allocated the Guoco yesterday.