SGD Bonds : 2014 Hall Of Shame
A friend was complaining to me about some prices that are not holding up to screen levels.
Being a savvy investor, he checked the Bloomberg price before asking for a bid only to be told that it was over 1 ct lower and another bank claimed that they had forgotten to remove their bid because they cannot buy the paper.
I took the liberty to prepare the 2014 bonds that are underwater ie. below their issue price. Err, ok, I did not. It was kindly contributed by a concerned friend.
These are the best screen prices we can salvage (which are potentially not tradeable ONLY ON THE BID BUT THE OFFERS ARE GOOD).
Here goes.
Worst performing is Swiber 5.55% issued back in April. This is closely followed by Geo Energy.
Note that most of the names are local small cap companies in the O&G, shipping, real estate and commodity sector.
There is really nothing much investors can do because names like Geo Energy are priced by just 1 or 2 banks at most and their appetite to buy any paper is limited to usually 10% of the issue size or less.
As for buyers, I suggest that buy levels should be on the BID PRICE rather than lifting the offers. And I daresay, you will be hit !
Good luck !
hahaha, i have 4 bonds trading below 100 now (2 are in the above list). The rest are still ok. How about the rest of us here?
I also encourage our friends to calculate your bond portfolio’s weighted-average Time to Maturity/First Call.
Mine’s appx 22 months.
I’ve 2 bonds trading underwater before accrued interest (also in the list). Fortunately they are only 1 lot each or total 2 lots (500K).
The rest have larger holding between 500K to 1.25 mio.
Maturity or Call dates range limited between 17 to 36 months.
There is a difference between hugely underwater and slightly.
I think the hugely underwater ones are the result of irresponsible banking practices if anyone remembers the Olam 2022 that was re-opened just 2 weeks before the fiasco. That is my personal opinion.
Thanks jimmy, it is good that our bond portfolio’s lifespan are not too long. At least, we can hope those trading below 100 can can get closer to par when maturity is nearer.
KH, thanks for sharing too.
I supposed short-dated bonds is the most defensive way to go right now.
My current maturity/call dates are 17, 24, 27, 30, 32 & 36 months from here. Hope this outlay can handle next year’s rate hike well. My only bonds with call date is GLP 5.5%.
All the Best!!
Actually, the best trade so far has been the long ends.
http://52.77.202.71/market/strategy-bonds-for-secular-stagnation/
The curve has flattened like crazy.
Thanks Jimmy,
I also adopt the same strategy as you; switching to 2-3 years bonds to ride out the upcoming global rate hikes ahead.
You have a good weekend
Hi TH,
I know you discussed it briefly last year in 1 of the posts – any views whether you think Ezra will call on their Sept 15 option for the 8.75% perp? Step-up is 3.0%.
Looks a little tempting 🙂
From a company’s standpoint, a call option has 2 factors – 1. cash available and 2. cost of refinancing.
Instead of calling, they are better off buying the bonds back right now in the secondary market and locking in a decent profit. But of course shareholders would prefer a stock buyback.
One of the interesting ones is hyflux. if I recalled correctly, it went to as high as almost 103 before retreating to the current price. Must be the works of your article!
Hopefully (and most likely) it was not me.
Bad karma, you know !