Singapore Market Buzz And Update
Another little research firm has published a scathing report on Nobel, comparing it to Enron. https://icebergresearch.files.wordpress.com/2015/02/report-1-associates-and-agri-15022015.pdf
The stock price is down almost 8% on the day.
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In conjunction with another article on CoCos to be published later this afternoon, I pulled out a list of discounted high yield bonds in SGD and realise we have little to choose from.
I notice certain anomalies in the offshore names like Unicredit SGD LT2 paper that is a sub debt (non Basel 3 compliant) and the Trafigura SGD perpetual, both trading way off scale from their USD equivalents.
Trafigura USD 7.625% perpetual (callable 04/2018) was last done at 7% while the SGD perp (callable 02/2019) is indicating a rough yield of about 8.6%.
Unicredit USD 8% perpetual (callable 06/2024) and rated BB- is yielding 8.04% while the superior Unicredit SGD sub is indicating 7.6%.
Tata Steel SGD 4.95% 05/2023 is in line with the Tata USD 5.95% 07/24 which is giving 5.69%.
On the topic of CoCos in SGD dollar, I compiled a table of SGD bank perps and found our local banks have 3 Basel 3 compliant perps out there, 2 out of UOB and 1 from DBS, OCBC has none.
The yields do not look too hot compared to the hard currency perps that I talked about in my other post because we shall have to assume that these non compliant perps will be called back at any instance given that there is a Change of Qualification Event.
The prospectuses all carry the right for the banks to exercise a redemption should the perps cease to qualify as Tier 1 capital of the bank.
In any case, if the bank chooses to call back the shares tomorrow, any price above 100 (+ about 30 days coupon) is not a good price.
And it is no use holding out on them in this case although I heard some interesting gossip the other day about how a hedge fund profited handsomely from holding out on the Goodpack bond buyback exercise last year.
Moral of the story : Retail buyers always lose out.
Noble Bond Prices
Noble USD 3.625% 03/18 98/100 down 1.5
Noble USD 6.75% 01/20 104.50/106.50 down 3.5
The advanced-indicator, Baltic Dry Index is now at historical lows. Things are going to different after we return from CNY holidays next week.
China’s COSCO Dis-Assembles 8 Ships Amid Glut As Baltic Dry Hits Another Record Low
http://www.zerohedge.com/news/2015-02-16/chinas-cosco-dis-assembles-8-ships-amid-glut-baltic-dry-hits-another-record-low
Less ships, less rigs…. less shipyards ?
Ascendas perpetual bonds.. will the company exercise its option to redeem the bonds at par arising from the change of control??
Provided always that in the event that a Change of Control has occurred, so long as the Issuer has not already redeemed the Capital Securities in accordance with Condition 5(g) (Redemption upon a Change of Control), the then prevailing Distribution Rate shall be increased by a rate equal to the [Change of Control Margin] with effect from, and including, the immediately following Distribution Payment Date (or, if the Change of Control occurs on or after the date which is two business days prior to the immediately following Distribution Payment Date, the next following Distribution…
The step up margin is 1%.
Considering that Temasek can probably fund at a much cheaper rate, it would be sensible to assume there will be a redemption.
The securities are trading at 102.60 mid or thereabouts.
dont think there will be alot of pleased investors if it gets called at 100.00.
plus mgmt stated that holders and potential investors “are advised to exercise caution when trading” in the perps. sounds like there’s a gd chance company will exercise this.
……… elections coming soon…
The last time Tuas Power and gang did the same and I had those bonds at 104 !!!!
Watch USD’s strength against SGD next week.
Disclaimer: I don’t speculate in FX, just keep a look out.
Yes. We have Yellen testifying next week.