SGD New Perp Review : Ascott Residence Trust 5%

Issuer:  DBS Trustee Limited in its capacity as trustee of Ascott Residence Trust
Issuer Ratings:   Baa3 (Moody’s)
Issue:  SGD Subordinated Perpetual Securities
Issue Ratings:   Unrated
Format: Regulation S and Sections 274 and/or 275, Chapter 289 of the SFA of Singapore
Issue Size: Up to SGD 150,000,000
Initial Price Guidance: Low 5%
Tenor: Perpetual NC5
Ranking: Direct, unsecured and subordinated obligations of the Issuer
Call Option:[ ] 2019 & at every Distribution Payment Date thereafter at par
Distribution:  Reset at the end of Year 5 & every 5 years thereafter based on prevailing  SGD 5Y SOR plus the Fixed Spread
Distribution Step-up: None
Distribution Payment: Fixed. Semi-annually in arrear, Actual/365
Distribution Deferral:At issuer’s discretion. Any deferred Distributions are   non-cumulative
Dividend Stopper: Yes
Other Redemption: At par under taxation, ratings, accounting, minimal  outstanding amount, and regulatory reasons
Listing:  SGX-ST
Details: SGD250K/Standalone/Singapore Law/CDP

– New Ascott Residence Trust (ART) SGD Perp announced

– Initial price guidance: Low 5%

– Issue Size: Up to SGD150MM

– Structure: Perp NC 5, reset in year 5 with dividend stopper

– Compable Bonds:
FCL Treasury  4.88% Perp Callable 09/2019  99.50 5.0%
Mapletree Logistics Trust 5.375% Perp Callable 09/2017  104.50 3.74%
Capitaland Senior 3.8%  08/24 100.25  3.77%

Company Investor Presentation :

What a day to bring out a perp ! especially when perps are selling off in SGD space.

Yes, for those who have not heard, Genting is down, Cheung Kong perp is down, Mapletree Treasury is down, Fraser Centrepoint is down.

List of SGD Perps (not comprehensive).

sgd perps listThe last column is the call date but I did not include the coupon step ups.

On first glance, Ascott is giving a decent price for its small issue size but for its lack of step up in the coupon in year 5 which is the market norm these days. Thus we will see a typical year 5 refix at the issued spread.

For its rating and parentage, I see this issue as a buy over the recently issued FCL Treasury although it would be a tough choice between this and Cheung Kong (a senior perp) which has suffered because of its lack of coupon re-fixing.

Nothing much to comment about their finances and credit quality.

Good luck !