SGD New Issues : GUOCOLAND SGD 2.5Y 4% & 5Y 4.5% Dual Tranche
New 2.5Y and 5Y dual tranche transaction for Guocoland announced with an initial guidance of 4% area and 4.5% area respectively.
– This is on the back a strong set of Q2 financial results released yesterday where its gross revenues grew by 40% and its PBT and Net Income more than double versus the same quarter last year.
PB rebate: 20cents on 2.5yrs and 35cents on 5yrs
OCBC would be offering trading switches for existing investors of the following bonds that are participating in the new transaction:
GUOLSP 4 ¼ 02/23/15 Corp
GUOLSP 4 ⅛ 05/13/15 Corp
GUOLSP 4 ⅞ 03/11/16 Corp
– Deal size is benchmark and will be tranched according to demand.
– Timing: Today’s Business
COMPS
GUOLSP 5 02/23/17 103.00, 3.47%
GUOLSP 4.35 09/12/17 101.50, 3.74%
GUOLSP 3.95 04/01/19 99.90, 3.98%
GUOLSP 4.1 05/13/20 99.50, 4.21%
Net profits higher as announced yesterday which means today is a good day for new bonds.
Debts Due :
2015 SGD 1.194 bio (SGD 527 mio bonds)
2016 SGD 458 mio (SGD 458 mio bonds)
2017 SGD 2.069 bio (SGD 265 mio bonds)
2018 SGD 521 mio
2019 SGD 125 mio (SGD 125 mio bonds)
2020 SGD 125 mio (SGD 125 mio bonds)
Perp SGD 200 mio callable 05/2016 (SGD 200 mio bonds)
Market Cap : SGD 2.15 bio
Size of Bond MTN Programme : SGD 3 bio (upped from SGD 1.5 bio in May 2013). Current utilisation : SGD 1.7 bio.
Their last issue not doing too well, trading at 99 after its launch in Sep 2014, paying a coupon of 3.95% for 4.5 years. https://tradehaven.net/market/sgd-new-issue-review-guocoland-4-5y-4-3/
Now they are paying up to 4.5%, a credit premium of 2.88% over the 5 year interest rates and 4%, a credit premium of 2.81% over the 2.5 year interest rates.
My comments last year even though I do not have anything good to say about them.
“It is a family empire and there is little risk for shareholders because they are on the same side as the owner. Bond holders should also not have much to fear.”
Now as for the value that they offer ? 4.5% would put them in the same league as the smaller REITs like Viva and Sabana and Cambridge etc and the more stable names like G8 Education.
I remain neutral on them.
TH,
Hello again. Do you know how the books currently stand? I am lead to believe both issues are substantially over-subscribed.
Thanks JC8888
** GUOCOLAND SGD 2.5Y & 5Y Dual Tranche – Update #3 **
– Final Guidance of 3.6% (the number) on 2.5Yrs and 4.2% (the number) on 5Yrs.
– Orderbook approaching S$1bn, >6x oversubscribed.
– Deal size capped at S$150M total across 2 tranches. Expect tranching to be skewed more to 2.5yr and size according to demand.
– Timing: Books Subject. Allocs, L&P shortly.
Guoco land is always doing this. The final number being way off the initial. Was somewhat irritated when I switch out of a maturing GLL bond into the 4.5 yr 2019 expecting a coupon of 4.2% that ended up at 3.95%.
Mr Yonks, you can always indicate to your RM the acceptable yield to you during books-building for new issues. Eg. If indicative yield is 4%, you can tell your RM that you don’t want any allocation if the yield is lowered by more than 25 basis point (bp) eg. 3.75%.
This is just an example, but if the yields are MORE than 30bp lower, it probably hint to a very strong demand and the chances of offloading a small capital gain is higher (BUT NOT GUARANTEED).
PS: imho, Capital gain should be a second consideration in bond investment. 🙂
Not by the issuer.
It’s a marketing gimmick by the marketer to entice and can include demand figures.
Helped by QE.
Better issues are reserved, public get leftovers.
Share your wealth!
Hey Guys,
Was out and so I missed all the hullabaloo.
1 bio indeed.
All I can say is that everyone got what they deserve.
Note that 2017 is their big payout year where by then, the Tanjong Pagar TP180 would have TOP, hopefully without another incident or delay.
I wonder who would be laughing, 250k downpayment for a unit in TP180 or 250k for Guocoland 3.6% 08/2017 ?
Hi KH,
Yes I kinda took my eye off that one as it was a switch out of an existing bond so I was more tempted by the fact that I had first rights to the newer bond. Lesson learnt!
GUOCOLAND 3.6% 08/2017 100.25/100.35
GUOCOLAND 4.2% 02/2020 99.90/100.15
GUOCOLAND SGD 3.6% 08/07/17 (2.5YR) REOPENING
– Reopening of the existing Guocoland 08/07/17 3.6% announced at 100.25 (the number) versus last quote of 100.40/100.80 yesterday.
– The final reopening price has also been set at 100.25 and there will be no tightening of pricing.
– PB rebate of 20cents
– Expect the reopening size will be modest relative to the existing issue size.
– OCBC will be offering trading switches similar to the initial transaction for existing investors of the following bonds that are participating in the reopening.
GUOLSP 4 1/4 02/23/15 Corp
GUOLSP 4 1/8 05/13/15 Corp
GUOLSP 4 7/8 03/11/16 Corp
– Timing: TODAY’s Business