SGD New Issue Review : United Energy 2Y 7%


Issuer:  United Energy Financing (Bermuda) Limited
Guarantor:  United Energy Group Limited
Series:  001
Status: Direct, unconditional, unsubordinated and unsecured Notes
Format: Reg S, S274 & S275 of Singapore SFA, issuance off SGD 1 Billion Multicurrency Medium Term Note Programme
Tenor:  2-years
Initial Price Guidance: 7.0% area
Issue Size: TBD
Issue Date:  [●] October 2014
Maturity Date: [●] October 2016
Change of Control:  Change of Control investor put at 101% plus accrued interest, in accordance with the Programme
Financial covenants:
– Consolidated Total Equity is not less than US$900,000,000
– Consolidated Total Debt / Consolidated Total Equity ≤1.2x
– Consolidated Secured Debt / Consolidated Total Assets   ≤0.6x
– Consolidated EBITDA / Consolidated Interest Expense ≥6.0x
Redemption for Taxation Reasons :    Yes, in accordance with the Programme
Use of Proceeds :     General corporate purposes and such other purposes as the Group may specify in the applicable pricing supplement.
Listing/Law/Clear:   SGX-ST/Singapore Law/CDP
Denoms:              SGD250k

KRISSP (KrisEnergy)   6.25% 06/17 @ 103.00, 5.02%
KRISSP (KrisEnergy)   5.75% 08/18 @ 100.55, 5.59%
MIEHOL (MIE Holdings) 6.875 02/18 @ 100.50, (USD Yield 6.70%)

Coming out on a day when I wake up feeling like taking it easy and realising that this site’s income for last month was a pathetic 105 bucks – 30 from Google ads, 75 from the banner ad on the side.  I was actually surfing the web for dogs that look like Christine Lagarde when news of 2 new SGD bond issues come along …

lagarde dog

Thanks to the currency war that the FOMC minutes have turned the world into, banks are quick to bring out the new issues before investors change their minds tomorrow.

When I wrote about up coming bond issues, United Energy stood out as a “highly interesting” issue that would make some of our new local issues LOOK BAD.

But on closer scrutiny, there are reasons why 1. United Energy is trying to raise money in Singapore (instead of their home base in HK) for up to 1 bio SGD and, 2. the coupon is a highly attractive 7%.

The company is 71% owned by one man and his daughter is an executive director. The owner, Mr. Zhang is also the Deputy Chairman of China
Minsheng Banking Corporation Ltd.

They have 2 geographical areas of operations – Pakistan and China.

ueg turnover

At first glance, the accounts look decent on the summaries. That is until a friend suggested I take a closer look at their annual report which is not audited by any of the Big 4 audit firms.

Link to annual report :

First oddity is that their balance is buoyed to a very heavy extent by INTANGIBLE ASSETS.


If u strip out the “Intangibles”, the Net Assets becomes just less than 100 mio HKD.

But then again, they are great friends with the Pakistan government.

” During the year under review, the Government of Pakistan agreed to grant approximately 900 km2 of exploration areas to the Group at no cost…”

Recent announcement on 30 Sept, I like the “may or may not materialise” bit which sounds Intangible.

ueg announcement

And their share capital account has quite a bit of this Accumulated Losses thingy that I do not quite understand.

ueg bal sheet 2

And their net capital is only about HK 130 mio.

I guess I answered the question of why they are paying 7%.

Why are they issuing in Singapore ?

“Singapore’s bond market is getting a boost from Chinese borrowers tapping the island’s millionaires for record amounts at rates almost 30 percent cheaper than home.

Private investors in Singapore took almost all of the S$380 million ($299 million) of local dollar-denominated notes sold by mainland Chinese companies excluding banks last month, according to people familiar with the matter. Offerings in the currency by all Chinese borrowers rose to S$1.7 billion this year, almost double such sales for the whole of 2013, according to data compiled by Bloomberg.

China’s issuers are increasingly targeting Singapore’s surging millionaire base to raise funds amid record borrowing costs at home. Debut issues from offshore companies rose to 10 in 2014 compared with none five years ago, supporting a market that makes up just 20 percent of bond sales in the Asean region compared with about 32 percent each for Thailand and Malaysia.”

Anyone following the AGILE scandal ??