SGD New Issue Review : SEMBCORP SGD 7Y & 12Y
NOTICE : PLEASE LINK BACK TO THIS SITE IF YOU WANT TO USE THIS POST.
NEW ISSUE: SEMBCORP SGD 7Y
– New Sembcorp SGD 7yrs announced. Deal is anchored
– Initial price guidance: 3% area
– Issue size: SGD 100MM (capped)
– Timing: As early as today’s business
Comps:
SEMBCORP 3.7325% 04/2020 at 2.72%
JURONG SHIPYARD 2.95% 09/2021 at 2.95%
SEMBCORP INDUSTRIES SGD 12YR
– New Sembcorp Industries SGD 12YR announced at initial guidance of 3.7% area
– Deal is anchored by strong institutional/agency IOIs
– Issue size: SGD150million (capped)
– Today’s Business
COMPS
SEMBCORP 3.7325% 04/09/20 105.45, 2.64%
SEMBCORP 3.64% 05/27/24 102.4, 3.34%
SEMBCORP 5% 08/29/49 (PERP) 103.75, 3.91% (YTC)
JURONG SHIPYARD 3.85% 09/2029 100.00, 3.85%
We last saw Sembcorp last November with a 10.5 year issue. Since then, we have seen Jurong Shipyard come out in September to tap the market for SGD 600 mio in 7 years and 15 years.
Now the mothership is coming out for 7 & 12 year issues at a higher coupon indications than Jurong Shipyard.
Because this is good stuff and definitely not a retail bond. There is no PB rebate for this one.
Anyhow, 7 year interest rates are at 2.09% today and around 2.11% when Jurong Shipyard was launched.
This gives us only about 0.91% credit premium, a trifle thin considering that 7 year interest rates shot up to 2.35% on 19 September (2 weeks after Jurong Shipyard was launched).
Jurong Shipyard 7Y paper never really rallied past 100.10 and fell to a low of around 99.80, holding the 100 level as we speak. And it is no use asking your private banker for a bid to test them, they will pay 100.50 because they know you do not have the paper.
Back to Sembcorp Industries.
“Keppel Corp (mkt cap 19.97 bio) and Sembcorp Industries (mkt cap 9.24 bio), twin horses in the Temasek stable with ownership standing at 20.99% and 49.46% respectively.
Sembcorp Industries in turn owns 60.57% of Sembcorp Marine (mkt cap 8.29 bio), widely seen as their cashcow and glamour business (other than their other business of waste management) that contributes towards half of their total profits.
In short, Sembcorp Marine nicely complements the Sembcorp Industries portfolio as the cyclical and volatile component vs the humdrum of the business of garbage.” https://tradehaven.net/market/16107/
Stock price is at a 2.5 year low vs the highs we are seeing in the STI.
SEMBCORP INDUSTRIES SHARE PRICE
This is due to the drag in Sembcorp Marine that is in the most pessimistic industry we can think of right now – O&G. http://www.businessweek.com/news/2014-10-12/bears-crowd-to-sembcorp-after-stock-s-18-percent-drop-in-value
Dividend Yield at 1.08% last which is not too hot.
So Sembcorp Industries is moving to greener pastures – REAL ESTATE ?
Yes. The recent results show a 453% increase in operating profits from their urban development business.
In conclusion, I think that only the stock markets have been harsh to this company. Bond investors still love them for their Temasek association and GLC status. It shows in the price – Jurong Shipyard 100 vs Swiber at ??? (try to hit that bid and see what happens).
I believe that the 7 year coupon will come lower than Jurong Shipyard (which will prove my point) given the small issue size of $ 100 mio (vs Jurong Shipyard 7Y SGD 275 mio) and we will probably not hear about this bond in the secondary markets for a long time (will be locked up with all your insurance monies).
Good luck !
SEMBCORP INDUSTRIES SGD 12YR – ORDERBOOKS IN EXCESS OF S$200MM
SEMBCORP INDUSTRIES SGD 12YR
– Orderbook circa S$300M, deal is anchored by strong institutional/agency IOIs.
– Issue size: SGD150million (capped)
– Books Subject at 4.45PM
NEW ISSUE: SEMBCORP SGD 7Y
– Book approaching SGD150MM
– Final price guidance: 2.94% (the number)
– Issue size: SGD 100MM (capped)
– Timing: Book subject at 4.30pm, today’s business
Unrelated, but for info:
Iskandar real estate developer Rowsley Ltd, partly owned by Singapore billionaire Peter Lim, said it has set up a S$500 million multicurrency medium term note programme to fund its activities. DBS and Standard Chartered Bank are the joint arrangers and dealers. (Source: The Business Times)
I am sure it will be a sell out and leverage will be very generous.
This is how people become UHNW – selling bonds and NOT BUYING BONDS.
http://www.channelnewsasia.com/news/singapore/40-people-join-singapore/1481784.html
SINGAPORE: The ultra high net worth (UHNW) population in Singapore saw the addition of 40 individuals in 2014, according to a wealth report released on Wednesday (Nov 19).
There are now a total of 1,395 UHNW individuals in Singapore – a record high. Their combined net worth is US$180 billion (S$234 billion), an increase of 12.5 per cent over the past year, according to the Wealth-X and UBS World Ultra Wealth Report.
UHNW individuals are defined as those with US$30 million and above in net assets. The size of Singapore’s UHNW population ranks sixth among Asian countries and 19th globally, according to the report.
This year, while Singapore’s UHNW population grew slower than both the global and Asian average, the combined wealth of its UHNW individuals has grown significantly faster.
“Such strong growth is reflective of the city-state’s growing international appeal with regards to the strength of its financial sector, and the ease of both establishing and conducting business in the country, allowing for rapid wealth accumulation” the report stated.
The report also found that:
Singapore’s UHNW population controls almost 17 per cent of the country’s total wealth of US$1.08 trillion.
More than 20 per cent of Singapore’s UHNW population is engaged in the finance, banking and investment industry
hi starry,
I am very concerned about this: In bid to shore up Malay land reserves, Johor MB says will next seize non-Malays’ land
http://www.themalaymailonline.com/malaysia/article/in-bid-to-shore-up-malay-land-reserves-johor-mb-says-will-next-seize-non-ma
“Section 7 of the Malay Reservations Enactment (Federated States) 1935 bars the disposal of reserve land to non-Malay owners, while Section 8 of the same enactment also prohibits the transfer of ownership to non-Malays.
Article 89 of the Federal Constitution states that any land that was a Malay reserve before Merdeka may continue as a Malay reservation.
The power to gazette land as Malay reserve lies with the mentri besar, on the advice of the state rulers.”
Going forward, I think new investors in Iskandar need to confirm if their land plot sits on Malay Reserve Land (due diligence). Many of my friends and relatives have invested in Iskandar properties.
KH,
Yes, I think Iskandar is not the place to sink your funds right now unless one has a lot of money (i.e. diversified) and has a long investment horizon.
Prices have stalled / dropped in many areas, and there is hardly a resale / rental market to speak of.
And Malaysia more broadly has some news from time to time which is a bit worrying, like the article you posted, and there were rumors PAS is considering using mini-guillotines in Kelantan to chop off hands(!!).
You heard it here first.
It is KUANTAN !!!
http://52.77.202.71/market/food-for-thought-chinas-new-bff-malaysia-boleh-no-way/
Incidentally, I recommended some friends to downgrade to Iskandar because you can use your Medisave there once Rowsley gets going. It is an inevitability for most of us.