SGD New Issue Review : UOL 3Y 2.6%

SGD NEW ISSUE : UOL TREASURY SERVICES SGD 3YR – IPG 2.60% area

Issuer :   UOL Treasury Services Pte. Ltd.
Guarantor:  UOL Group Limited
Issue Rating :  Unrated
Status :   Senior Unsecured
Issue Size :  TBD
Format :  Bearer, Regulation S only and S274/275 of SFA, Issuance off Issuer’s S$1bn Multicurrency MTN Prog
Tenor : 3-year
Initial Price Guidance :   2.60% area
Coupon Payment : Fixed Rate, semi-annual, actual/365 (fixed)
Denomination :   SGD250k
Governing Law:   Singapore Law
Listing:    SGX-ST
Clearing :   CDP

– New 3Y SGD announced on the back of strong reverse enquiry
– Initial Price Guidance at 2.60% area
– Timing : As early as today’s business

Comps:
CDL 2.45% 03/14/18        100.14 / 2.396%
KEPPELAND 3.1575% 08/25/17   102.36 / 2.128%

Applause !!

UOL has not issued anything since April 2012 ! They had a 300 mio maturity last year for a 3 year paper that yielded 2.5%.

Now they are back in the markets looking for a 3 year deal at 2.6%. What would you think ?

Only 2 outstanding bonds out there which have not been trading much.

UOL 2.493% 05/2015  SGD 175 mio 3Y trading around 100.1
UOL 3.043% 05/2017 SGD 75 mio 5Y trading around 101.25

Financial leverage lower than Capitaland, CDL, OUE, Keppeland and rest. Accounts look good enough.

3 year interest rates coming off in a big way with SOR fixings at a 3 week low. At 1.55%, we are getting a 1.05% credit premium for this paper.

 

Recent issuers

OUE 3.8% 04/2020 issue spread 1.9%
FCT 2.9% 04/2019 issue spread 0.96%
HPL 3.88% 04/2020 issue spread 1.8%
Ascendas Hosp Trust 3.3% 04/2020 issue spread 1.21%
CDL 3% 04/2020 issue spread 0.79%

I would expect this bond to sell for its scarcity value as fund managers out there have the limits for this name. The last 3 year real estate paper we saw was out of Guoco, a much smaller and more leveraged name, at 3.6% some 2 months back.

The 2.6% coupon looks a tad too thin for retail interest and leverage will not make it look much better (just look at SIBOR !).

Good luck !