SGD NEW ISSUE: CWT Limited SGD 5YR 4.8%

ISSUER:   CWT Limited
RATINGS: Not Rated
STATUS: Senior, Unsecured, Fixed Rate Notes
ISSUE SIZE: TBD
FORMAT/DOCS:  Reg S, S274 & 275 of SFA, issuance off Multicurrency Debt Issuance Programme
INITIAL PRICE GUIDANCE:   4.8% area
TENOR:  5 Years
INTEREST PAYMENT:  Semi-annual, actual/365 (fixed)
DENOMINATION:  SGD250K
GOVERNING LAW:  Singapore Law
LISTING:  SGX-ST
CLEARING:   CDP
SELLING RESTRICTIONS:  As per Information Memorandum dated 1 April 2013, including the Singapore selling  restrictions under Sections 274/275 of the Singapore Securities and Futures Act, Chapter 289, Reg S only.
JOINT LEAD MANAGERS/BOOKRUNNERS:   DBS and OCBC
B&D:  OCBC
TIMING:   As early as today

– New SGD 5Yr transaction for CWT Limited announced at initial guidance of 4.8% area.
– Deal is announced on the back of a number of significant IOIs from institutional and private banking accounts.

Comparable Bonds :
CWTSP 4 03/13/17  100.50/3.74%
CWTSP 3.9 04/18/19   98.50/4.30%

Paying up in the higher interest rate environment.

The last CWT 6 year issue done in 2013 was at a credit premium of 2% because the 6 year interest rates were just 0.83% then (vs bond coupon of 3.9%).

Today, the 5 year interest rate is at 2.16% which gives us a 2.64% spread, much tighter than even their 3 year issue from last year done at the widest spread they ever paid of 3.15% (for 3 years). https://tradehaven.net/market/new-sgd-issue-review-cwt-3y/

Therefore, not that value for money in relative value terms.

I think the absolute yield looks good although the industry outlook is starting to dim a little and I would expect consolidation to take place in the logistics space given the spate of new market entrants through large corporations wanting to conquer a share of the pie.

And CWT is looking pretty geared these days (higher than Olam), since they ventured into the commodity business.  Debt/Equity stands last at 187%.

cwt fin leverageQuarterly financial leverage ratios for past 10 years.

I also note that their receivables have exploded last year, slightly worrying although the increase in long term borrowings should be comforting.

Banking on their household name and their former government affiliation, I would suppose this issue would be decently received just based on the higher absolute coupon rate.

My comments last year were that this is a bond to include in the 30 million dollar portfolio given how fashionable it was last year drop names over lunch. I would not expect the same sort of admiration this year if you bragged about buying the latest CWT issue to friends. You would be much better off saying you got the latest Delhi Airport paper, 😉