SGD Mid Week Recap : Singapore Slings Surprise !

It has been more than unsettling for me when I painstakingly write 2 articles yesterday morning, one on Singapore’s first ever AT1 issue, to find them missing in the afternoon.


If anyone has a copy of the OCBC one, I would appreciate if you could share it with us.

Anyway, election campaigning appears to have started in Singapore led by the URA carpark attendants although I am not sure whose side they are on this time. 2 parking tickets in 3 days is definitely not humouring me, to say the least !


I will rehash what I managed to salvage from the OCBC piece I wrote.

With 5 year interest rates at their 6 year highs today, it is time to ignore the rates and bring out a 5y callable perpetual at 4% for Singaporeans to savour.

My first thought – OCBC does it again !

From history, OCBC has never paid very well to Singaporeans.

Let’s take a look at recent local perpetual deals.

Nov 2013 DBS 4.7% SGD perp
Nov 2013 UOB 4.75% SGD perp
Jul 2013 UOB 4.9% SGD perp
Jul 2012 OCBC 4% SGD perp

Down memory lane.

Oct 2010 DBS 4.7% SGD perp
May 2008 DBS 5.75% SGD perp
Aug 2008 UOB 5.05% SGD perp
Aug 2008 OCBC 5.1% SGD perp
Jun 2008 OCBC 5.1% SGD perp

List of familiar global names I dragged out.


And the other table.


Facts about this OCBC AT1 paper.

1. It holds the world record for having the lowest coupon set for an AT1 paper done at 3.8%. SINGAPORE SLINGS SURPRISE !!

2. It has an MAS CET1 (Common Equity Tier 1) trigger which I suspect many buyers could be mistaking for a MAS GUARANTEE ? and assuming that MAS will ensure that the paper would be safe.

3. It would be the 2nd highest yielding SGD bank paper after Maybank perp (no loss sharing) which is callable in 08/2018.

And my conclusion ?

OCBC shareholders rejoice ! Dividends at 3.79% ! With capital upside to boot ! And at the rate the share price is going, there will be no rights issues for a while and perhaps more buybacks !


Current bond price 99.90/100.10 !

(Bloomberg) — Lender sells bonds at 3.8%, IPT was 4% area.

  • Orderbook >SGD1.5b from 71 accounts
  • By region
    • Singapore 98%
    • Others 2%
  • By investor type
    • Private banks 76%
    • Fund managers/insurers/corporates 24%


Other Bond News

  • Noble USD 2020 Bonds Lowest Since Dec. 2011
  • Ezra Holdings announces call on their SGD perpetual securities

Less than a month after we wrote about this … “For the first time in 5 years, USDSGD at 1.40 has become a potential reality and investing in Singapore has become a tough, although not impossible, sell.”

We are there and more ! High 1.4165 on 12 Aug.

Dear old Singapore is caught between her immediate neighbours with the MYR and IDR both trading at their 1998 levels when the USDSGD was about 1.6-1.8 in those days. And a silent prayer to the bomb victims of Thailand.

It is a struggle but consumers are spending !… on cars ! Yes, Jun retail sales showed some nice gains +6.9% YoY vs +3.5% expectations. Ex-autos  at -3% !

Non oil domestic exports also looking good at +2.3% YoY gains for July and a +2.4% MoM gain against expectations of -0.1% growth.


Interest rates higher on the week with the curve steepening and my view from last week remains.

“the long ends do not look terribly attractive from a carry point of view relative to the 4-5Y belly, high yield credits excluded and not yet thinking of the 15Y bond re-opening this month end.”

We have the 15Y bond reopening announcement tomorrow and although I cannot see queues forming to buy the 09/2030 SGS at 2.95% during its auction next week, 27 Aug, I would expect there would be demand, nonetheless, from probably the same people who think that OCBC AT1 is a bargain at 3.8%. SINGAPORE SLINGS SURPRISE !!

It is just impractical to expect a bullish trend for Singapore with all that is going on in Malaysia, Indonesia and Thailand. Thus I am not surprised that the SGD has underperformed the IDR and THB this month and although I would expect the markets to take a breather into the FOMC minutes tonight and for the rest of the month, 1.40 looks like the new comfort zone.


Park safely, everyone !