SGD NEW ISSUE : ASPIAL 5Y 5.25% SGD 75 MIO

** ASPIAL TREASURY PTE. LTD. – SGD 5YR AT 5.25% **

ISSUER:  ASPIAL TREASURY PTE. LTD. (“Issuer”)
GUARANTOR: ASPIAL CORPORATION LIMITED (“Guarantor”)
STATUS:  Direct, unsubordinated, unconditional and unsecured
TENOR: 5 years
OFFER/ISSUE:  Up to S$75,000,000 in aggregate principal amount of 5-year bonds due 2020 (“Bonds”) comprising:
(A)  an offer of up to S$50,000,000 in aggregate principal amount of Bonds at the issue price of 100 per cent. To the public in Singapore through ATM/Internet Banking/Mobile Banking applications (the “Public Offer”); and
(B)   an offer of up to S$25,000,000 in aggregate principal amount of Bonds at the issue price of 100 per cent. to institutional and other investors (the “Placement”),
(collectively, the “Offer”), provided that:
(1)   the Issuer and the Guarantor reserve the right to cancel the Offer in the event that less than S$50,000,000 in aggregate principal amount of applications are received under the Offer;
(2)   the Issuer and the Guarantor may, at their discretion and in consultation with the Sole Lead Manager and Bookrunner, re-allocate the aggregate principal amount of Bonds offered between the Public Offer and the Placement; and
(3)  in the event of oversubscription in the Public Offer and/or the Placement, the Issuer and the Guarantor may, at their discretion and in consultation with the Sole Lead Manager and Bookrunner, (i) increase the issue size of the Bonds under the Public Offer and/or the Placement and (ii) determine the final allocation of such oversubscription between the Public Offer and the Placement, such that the maximum issue size under the Public Offer and the Placement shall not exceed S$150,000,000 in aggregate principal amount of the  Bonds.

INTEREST:  5.25% p.a.
INTEREST PAYMENT: Semi-annual payment
DENOM: S$1,000 and in integral multiples thereof
MINIMUM SUBSCRIPTION:
Public Offer –  S$2,000 in aggregate principal amount of Bonds per application or such higher amounts in integral multiples of S$1,000 thereof
Placement –  S$100,000 in aggregate principal amount of Bonds per application or such higher amounts in integral multiples of $1,000 thereof
OFFER PERIOD FOR PUBLIC OFFER AND PLACEMENT:
Wednesday, 19 August 2015 at 9.00 a.m. to Wednesday,  26 August 2015 at 12 noon. The offer period may be extended, shortened or modified by the Issuer to such duration as it may, at its absolute discretion, think  fit, with the approval of the Singapore Exchange Securities Trading Limited (“SGX-ST”) (if required) and the agreement of the Sole Lead Manager and Bookrunner, and subject to any limitation under any applicable laws.
EXPECTED ISSUE DATE: 28 August 2015
EXPECTED LISTING DATE:  On or about 31 August 2015
REDEMPTION AT THE OPTION OF NOTEHOLDERS UPON A CHANGE OF
SHAREHOLDING EVENT:  In accordance with the Offer Information Statement
REDEMPTION AT THE OPTION OF NOTEHOLDERS UPON CESSATION OR
SUSPENSION OF TRADING OF SHARES: In accordance with the Offer Information Statement
REDEMPTION FOR TAXATION REASONS: Yes, in accordance with the Offer Information Statement
LISTING: Main Board of SGX-ST
LAW: Singapore
CLEARING:   CDP
SOLE LEAD MANAGER AND BOOKRUNNER: DBS BANK LTD.

The Issuer
•    We are a Singapore-incorporated company. Our principal activities are the provision of financialand treasury services to the Guarantor Group and the joint venture and associated entities of the Guarantor. Our board of directors comprises Koh Wee Seng, Ko Lee Meng and Koh Lee Hwee. As at the LPD, our issued and paid-up ordinary share capital is S$2, comprising two ordinaryshares. We are a wholly-owned subsidiary of the Guarantor.
The Guarantor
•    The Guarantor is a Singapore-incorporated company and was listed on the Main Board of the SGX-ST in June 1999. With effect from 12 April 2001, the Guarantor changed its name from “Lee Hwa Holdings Limited” to “Aspial Corporation Limited”.
•    The Guarantor is an investment holding company that operates through its subsidiaries, which are principally engaged in a diversified portfolio of businesses:
Real estate: Jewellery: Other investments:
•    The Guarantor’s issued and paid-up ordinary share capital is S$215,872,203 (comprising 1,901,785,901 ordinary shares) and its market capitalisation is approximately S$700 million. As at the LPD, its substantial shareholders are MLHS Holdings Pte Ltd (“MLHS”)4, Koh Wee Seng, Ko Lee Meng and Koh Lee Hwee.

Risk Rating : High
Financing    :  zero

Compatables
ASPSP 5.5 2018 ytm 5.0%
ASPSP 5.05 2019 ytm 5.2%

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Aspial started issuing bonds in 2012 when private bank SGD bond interest picked up.

This is what they have paid.

Jul 2012 3 year 5.2% premium 4.67%
Sep 2012 2 year 4.65% premium 4.06%
Jul 2013 3 year 5% premium 4.08%
Jan 2014 3 year 4.5% premium 3.52%
Jun 2014 5 year 5.05% premium 3.42%
Nov 2014 4 year 5.5% premium 4.04%

Today’s bond premium of 2.95% for 5 year would be the lowest on record that they have paid for 5 year money !!!!! (note that 5 year interest rates are at 6 year highs today at 2.3%)

I am not sure why they are launching a new 5 year Aspial at 5.25% when their old 5 year (now 4 year) 5.05% is yielding about 5.34/5.28% ??

But that is what happens when a company tries to reach out the yield curve from their regular 1-3 year issuances to reach for the 5 year and 10 year tenors. But I am glad that prices have reversed higher lately.

There was a consent solicitation exercise in Apr 2013 but it is also good that there is not a single equity analyst covering them after all these years which means I better not say too much. https://tradehaven.net/aspial-bond-surprise-consent-solicitation/

We note that revenues are coming mainly from property development and financial services (Maxicash) these days and they did launch the tallest building in the southern hemisphere last year.

“jewellery company Aspial launches the tallest building in Melbourne’s Southbank in Singapore on Saturday, for lucky Singaporean investors to own a share of the tallest residential building in the Southern hemisphere.  http://www.straitstimes.com/news/business/property/story/tallest-condo-melbourne-aspial-preview-spore-saturday-20141024

I laud their foresight for height is indeed a necessity in Southbank, a highly flood proned area near the city centre which is not my idea of residential. (link to flood map : http://www.abm.org.au/adaptationproject/isitsb.html) Yet Asians love being near the shops and the city and Chinatown.” https://tradehaven.net/sgd-new-issue-review-aspial-4y-5-625/

One big worrying chart for those who analyse bond issues before they buy.

Their Interest Coverage ratio is currently at 0.9 times. That means that Earnings before tax and interest is 0.9 times total interest incurred.

Some fund manager just asked me an interesting question. What is the criteria for retail bonds these days ? Aren’t there some credit metrics to observe ?

Hmm, this is not off their SGD 500 mio MTN programme which currently has SGD 410 mio worth of bonds outstanding over the next 4 years.

2016 SGD 100 mio due
2017 SGD 80 mio due
2018 SGD 100 mio due
2019 SGD 130 mio due

Maybe that is why they are going the retail route ? The fund manager sounds a bit doubtful to me.

Let’s wish them and investors luck as their stock price rise on this news !