2015 : A Safer Year For SGD Corporate Bonds

I was playing around with the numbers and checking up on the bonds issued in Singapore year to date, mainly so I could write my usual piece on how investors are so often duped into buying new issues when they are better off investing in boring low yield stuff for better capital gains but I WILL NOT DENIED of that feeling of smug satisfaction this time.

For you see, corporate bond issuances have been well behaved this year ~ YAWN.

Of the 26 new issues that are known to the public, I note that the average trading price of 100.45 which is a leap and bound above the average trading price of 2014 bonds at their 99.05 trading price which is partly helped by the HDB bonds, some of which have rallied by 7% in their cash prices.

*Because I am lazy, I did not weight the issues by their issue size when computing the average price.

Noting that HDB has been glaringly absent from the issuance scene, we can potentially speculate that they are holding back for the launch of the retail bonds that the market is eagerly awaiting for by mid year.

What are the top 10 corporate bonds of 2015 ?

top 10 bonds 2015

Mostly real estate related names in the list with an average yield of 4.04% and price of 101.10, none of them longer than 8 years with most in the 3-5 year tenors.

Compare them to the top 10 bonds of 2014 and their average yield of 3.6% and price of 103.71, the 2014 bonds appear to offer better value in terms of total returns on their longer 5-10 year duration.

top 10 bonds 2014

As for the government bonds, performance has been mixed given the wild ascent of SIBOR funding rates to their 6 year highs just a few weeks ago. The best performing bonds remain the long end 15-30 year issues, whose price rise has not been without some heart break in between.

sgs ytd performance

It has been safe issuances this year as banks try to distance themselves from the negative headlines and bad publicity of last year when most of the new issues that were sold, tanked within months of hitting the street.

While they claim that accredited investors are assumed to have the necessary risk appetite and know-how to manage their portfolios, there were accusations of hard-selling tactics used.

I have no opinion on that matter because it is, afterall, a market of willing buyers and sellers and investors cannot expect profits to grow on trees just like they should expect losses around the corner.

I shall leave readers with the list of “The Fallen” bonds of 2014 and a thought if some of our favourite bonds of today may suffer the same fate down the road.

Note that the prices are approximations and may not represent where the market is priced.

Note that the prices are approximations and may not represent where the market is priced.