SGD NEW ISSUE : Ezion SGD 5Y 4% Committed Funding Backed Notes
NEW ISSUE: EZION HOLDINGS – SGD COMMITTED FUNDING BACKED NOTES DUE 2020
ISSUER: Ezion Holdings Limited
SERIES: 009
STATUS: Direct, unconditional, unsubordinated and unsecured Notes, issuance off the S$1.5 Billion Multicurrency Debt Issuance Programme
RATING: Unrated
FORMAT: Reg S, S274 & 275 of SFA
ISSUE SIZE: TBD
TENOR: 5 years
ISSUE DATE: [ ] August 2015
MATURITY DATE: [ ] August 2020
INITIAL PRICE GUIDANCE: 4% area (changes subject to market condition and demand)
USE OF PROCEEDS: In accordance with the Programme
COMMITTED FUNDING: Please refer to the attached Pricing Supplement
COMMITTED FUNDING PROVIDER: DBS Bank Ltd.
PRE-FUNDING: Please refer to the attached Pricing Supplement
REDEMPTION AT OPTION OF NOTEHOLDERS UPON CESSATION
OF TRADING OF SHARES: At par, please refer to the attached Pricing
Supplement
MANDATORY REDEMPTION UPON PRE-FUNDING FAILURE: At par, please refer to the attached PricingSupplement
MANDATORY REDEMPTION UPON COMMITTED FUNDING CEASING TO BE ENFORCEABLE: At par, please refer to the attached Pricing Supplement
REDEMPTION FOR TAXATION REASONS: At par, in accordance with the Programme
PAYMENT: Semi-annual, actual/365 (fixed)
DETAILS: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
LISTING: SGX-ST
SOLE LEAD MANAGER & BOOKRUNNER: DBS Bank Ltd.
TIMING: Today’s business
– New Ezion Holdings SGD 5yr Committed Funding Backed Notes announced
– Strong IOIs received from real money accounts
– IPG at 4% area
– Rating: Unrated
– Timing: Today’s business
Comparables:
DBSSP2.246 07/19 (AA-): 100.37, 2.15%, Z + 65, SOR + 45
CHRESO2.125 10/17 (Aa1): 100.15, 2.05%, Z + 108, SOR + 95
LEADIJ2.93 02/20 (AA-): 100.00, 2.93%, SOR + 79
5 year interest rate 2.225%, so this Ezion, at 1.775% premium, is easily double the credit spread that Logindo Samudramakmur (LEADIJ), subsidiary of Pacific Radiance. The Logindo issue is backed by a SBLC from UOB.
Yet, this is not an SBLC but viewed similarly and we would have to go into details to discern any differences.
So, 4% for 5 years ? It is high for DBS, whose 5Y notes are paying Libor+0.52%.
I say this makes a good and strong case for secondary Ezion prices to widen out especially when I note that those Ezion 2019-2021 papers are trading between 4.3-5.7%. And what about all those 5Y 4%-ish bonds like Guoco and weaker Reits ?
Demand is there for sure.
Is the committed funding irrevocable regarding of issuer’s financial conditions? What if the committed funding arrangement ceased (for whatever reason), then how is the safety of mandatory redemption assured? Anyone has the details?
*regardless not regarding
Good question.
No mention of financial conditions in the terms. As for the mandatory redemption, I am not sure if it has happened before over here but in China, there are a few cases of dispute recently although I am not sure if it was in the case of SBLC or a guarantor company etc.
***Ezion Holdings Ltd SGD Committed Funding Backed Notes – Update 2***
– Book in excess of S$1.0BN
– Issue Size: S$120MM (will not grow)
– Final Price Guidance: 3.70% (+/-5 bps)
– Rating: Unrated
– Timing: Book subject at 3.15pm SGT, today’s business
Hi Tradehaven,
Did they mention anything under “use of proceeds”?
May I ask your opinion on the likely hood, that they will call back their 7.8% perps with 3% step up in Sept, now that they are able to launch new bonds at much lower costs.
Thanks
It is a very fair point !
“The net proceeds from the issue of the Notes will
be used by the Issuer for general corporate
purposes, including the refinancing of existing
borrowings and financing of investments and
general working capital of the Issuer or its
subsidiaries.”
I am new to this.. what does committed funding means? Can we view it as a bond by DBS? If we can, then why is the bond fixed at a 1.5% premium to 5 year rate when dbs is only paying 0.5%? Where’s the catch?
Well >1 bio order book that is over 10X the issue size. Speaks for itself !
Hello TH,
To my simple mind – which doesn’t know much beyond O&G, I have to concede – this paper offer is an indication of how naïve and how uninformed DBS’ O & G Group is. It doesn’t make sense to fully commit – as they apparently have done – to a sector where there simply isn’t enough work to go around, at least in the next couple of years.
Mark my words …………… this one could end in tears ………………… but whose tears??
Take care, JC8888
Well, SBLCs are not that uncommon these days and UOB’s lead in the Logindo deal earlier this year paved the way.
It has yet to be tested in the markets and we hope it will not come to that. Yet it does not bode too well for future unsecured issues even if it is supposed to be a sign of confidence that DBS is backing them up.
Ezion 3.65% 08/2020 100.75/101.05
Ezion 3.65% 08/2020 101/101.30
Orderbook ~SGD1.5b from 30 accounts
By investor type:
Fund managers 56%
Private banks 43%
Others 1%
By geography:
Singapore 92%
Others 8%
Ezion closing 101.25/101.35
If anyone interested to read the terms. here is the link.
http://ezion.listedcompany.com/newsroom/20150729_185937_5ME_WLV8RYBZSD430TWU.2.pdf
Thanks to Cheers for the terms.
Not too long ago there were many stock buy calls with targets of around $2.50
Not too long ago, there were many that were scared off their perps by analysts.
Yes. People have short memories !
Hi Peter,
Sound like a case of RMs trying to get you to sell your long-term bond holdings and buy Equity linked note.
Anyway i always believe that we should not be too sensitive to short term movements and ignore our long term objectives.