Oxley 4-Year Retail Bond at 5%

So yet another retail bond hits the market this week. Oxley Holdings, for sure, is not an unfamiliar name in the corporate bond market, at least for private banking clients. They have 4 other bonds outstanding in the market, all with a min denomination of SGD250,000.

Here is a summary of the bond offering:

Bond Issuer: Oxley MTN Pte Ltd
Bond Guarantor: Oxley Holdings Ltd
Tenure: 4 Years
Currency:SGD
Coupon (p.a.): 5%; payable semi-annually
Min Investment Amount/ Min Subsequent amount: S$100,000 / S$1,000 (Placement tranche)
Expected Issue Date: 5 November 2015
Issue Size: Up to S$ 125,000,000 (Maximum Aggregate S$300m)
Bond Features: Change of Control Put/Cessation/Suspension of Trading Put

The placement tranche was well received with an order book (dominated by PBs) in excess of $100mm versus the initial size of $25mm which was subsequently upsized to $75mm. This augurs well for the public offer tranche which was launched with an initial size of 100mm. If the response to the placement tranche is anything to go by, we could see an upsize to the public tranche too. The maximum size of this tranche is now $225mm as the maximum offering across both tranches is $300mm.

Oxley is a relatively highly leveraged company. Here are some of its credit ratios (as of June 30 2015) from Bloomberg at a glance:

Net Debt/EBITDA: 12.7x
EBITDA/Interest Expense: 4.6x
Total Debt/Equity: 4.3x

Their debt maturity profile looks to be front-loaded with S$1.19 billion of debt (bonds + term loans) coming due in 2016-2018. I would not bet against them coming back to the market for refinancing needs during that period.

Having said that, this bond hits the psychological sweet spot of a 5% handle, and offers the second highest coupon among the retail bonds, after Aspial which did a 5 year at 5.25%, and which is holding up relatively well, trading at around 1.01 on SGX.

As an aside, Yellen & Co caught the market off guard early this morning by putting the possibility of a December hike firmly back into play. Will this affect public perception of this deal? We will see…