Singapore Bond Market Digest : Winners and Losers

Some market statistics for us to chew upon.

There has been approximately 147 new SGD dollar corporate bond issues in 2014 and 138 new issues in 2013.

Extracting those that are trading under 99.50, to allow for margin of errors in the prices, I compiled this list of 2013 and 2014 papers that are “underperforming” and ranked them according to their losses.

I found that 42 (29%)  of the 2014 issues are trading under water, i.e. trading under 99.5, compared to 32 (23%) of the 2013 issues, assuming that the reference prices I used are accurate enough.

2013 & 2014 SGD Bonds Underwater

We note that, invariably, these are those smacked down O&G names with some, recently issued as well.

But in the list, we have the HDB, CDL and supranationals, as well, reflecting the higher short end, 1-5 year, interest rates over the past year

My first thoughts are that it is not that bad at all.

Nothing under 90 bucks which means we have no margin calls to worry about.

As to whether the prices work, I am not sure as I am hearing that some banks are full up on some names and thus there is little liquidity left on the bids while the offers mostly work.

If we go back to last year to the last time we had general market weakness, some of the perpetuals were trading under 90 bucks and we had Tata Steel at a low of 80-81 bucks when it is a respectable 96 now.

Thus, it is no wonder that Koh Brothers, Mencast, Marco Polo and gang are opting for share buybacks this week instead of worrying about their bonds. The shares offer better value.

And none of them are too concerned as far as 2015 is concerned because there are not that many maturities for the local corporate issuers, for the first half of the year at least.

2015 bond maturities*Sorry for the duplicates in some of the issues.

In 2015, we will have 3 perpetuals with call options – Swiber 9.75% to call SGD 80 mio, Ezra 8.75% for SGD 150 mio and Ezion 7.8% for SGD 125 mio, both in September.

I reckon September 2015 would be the month of reckoning with chunky maturities out of Oxley, Ezra, Swiber and Ezion and I have a bad feeling that the new bond trading platform will not be ready by then.

I shall leave with the list of best performing bonds for 2013 and 2014, bonds that have appreciated 3% or more, noting with glee that Semcorp perpetual is there ! (If you guys are reading this, referring to friends who had spoken to me last year, you know you owe me lunch !)

BEST PERFORMING BONDS

Qualifier : Prices are based off our gauge of market levels and are prone to error especially under the currently strained market conditions.