BOND THREAD

[Iamderek]

Look at gold. .
Scary. ....

I bought some at 1370 USD / ounce.

Honestly, these days I always feel extremely stupid when clients ask me for the bank's view on gold, which is underweight. I personally disagree.

[phantom_opera]

this pic from zerohedge really make me laugh ... ok they don't use "Dark Side of the Force" but fingers

[Iamderek]

I have a friend heavily invested into Gold Guarantee....and Geneva Gold....
Why MAS just black listed them instead of upfront write them off....

Hope your friend was one of those who went in with his or her eyes wide.

[chestnut]

Here is a little secret:

Whatever the bank's equity derivatives desk recommends to us bankers for our clients, I never take those recommendations.

They need to offload their holdings to someone - in this case, you.

I have always planned my ELN trades for my clients independently of their recommendations.

Just for sharing: Client A has a strike price on Barrick Gold done yesterday at $18.50. Knock out at $19.50.

That's very nice of you.... I personally do not believe in getting ELN.... Might as well go direct into shares than make the miserable %.
Are u in previllege banking or private?

[Iamderek]

I keep asking my banker to price FCN on US/HK stock just for my own info. Sometimes, pretend want to do FCN. I keep track (excel file) on all FCN issued by foreign bank even though I did not trade.

Some bankers may not be happy if U keep asking for FCN pricing if no trade is done.

rdgs,
Vic

Bankers have to eat too.

It's also about trust between bankers and clients. Thus far I have always avoided tech sector for the US. For AAPL - no $360 strike price no buy.

[Iamderek]

That's very nice of you.... I personally do not believe in getting ELN.... Might as well go direct into shares than make the miserable %.
Are u in previllege banking or private?

Some clients do it because they don't mind buying at support. They also do it to support me as their banker. ELNs are almost always done with a Knock Out - quickest so far was four days KOed - client got one month's worth of 15% yield in four days.

My bank may be bringing in a broker soon into the branches for direct buying and selling of equities - that should liven things up.

Privilege - for now.

[chestnut]

Some clients do it because they don't mind buying at support. They also do it to support me as their banker. ELNs are almost always done with a Knock Out - quickest so far was four days KOed - client got one month's worth of 15% yield in four days.

My bank may be bringing in a broker soon into the branches for direct buying and selling of equities - that should liven things up.

Privilege - for now.

Yup, understand.... Different strokes for different people... Just like my friend will never buy bonds, he rather do reits. Capital gains and dividends. No right or wrong... All depends on risk appetite and preference.

[cbsh38584]

Bankers have to eat too.

It's also about trust between bankers and clients. Thus far I have always avoided tech sector for the US. For AAPL - no $360 strike price no buy.

2 days ago, I did get my banker to quote a FCN on APPLE.
Spot US$406
75% trigger level (US$304.5)
85% strike price (US$345)
100% knock. (US$406)
Coupon only 6.5%
6 mths.

It need US$1m to launch. Clients not interested as many got stuck at US$540. FCN/ELN is not for every investors especially the inexperience
one or those with low risk profile. Japan electric power is considered one of the safest stock. It can go burst due to earthquake.



rdgs,
Vic

[focus]

S$ Cheung Kong perpetual bond or long date good quality bond like Keppel corp can be your retirement life plan ?

If a person age 60 who has S$250k (no leverage) . Is he better off buying Annity plan which the return is less than 3% or buying a good quality Perp or straight bond yield 5% ?

Sing dollar Cheung Kong Perp bond (callable 2016) coupon 5% @100. You will rec S$12.5/yr till 2016. If it is not call back. You shall continue to rec S$12.5/yr perpetually until the next call date.

.....

I am still searching for a better return either for my retirement plan or my children education plan.


rdgs,
Vic

For me, I believe in diversification across the different asset class. It might not make me rich, but it is safe theoretically.

For bonds, the purpose is to create like what you say an annuity that promises a certain cashflow thru-out to support the living expenses. Thus, as long as long-dated bonds or perp of good quality is able to dish out above 5%(for sgd-denominated bonds), it seems a good deal to me.

The equity portfolio will provide the additional capital gain plus dividend.

The property portfolio is to depend on OPM(other people's money) to take care of fiat monetary policies and hedging against inflation and the capital gain.

Gold/silver port(very small percentage) is just to provide a disaster recovery part. Although I am using paper gold/silver as I seriously don't believe this day will come

In a way, when we are doing portfolio management, we are trying our best to produce something along the efficient frontier (ie, to have the best risk/return ratio using the asset allocation model). Do note you will have bouts of green-eyed when the equity market goes on a hyperbola but your networth is going up steadily but underperforming the equity market because of the drag of cash and bonds.

For those who are interested, you can google on a portfolio call THE PERMANENT PORTFOLIO. It seeks to take care of all scenarios, although I find the gold/silver weightage too strong for my liking. It has its critique but it seems to have withstood test of time as well.

[cbsh38584]

For me, I believe in diversification across the different asset class. It might not make me rich, but it is safe theoretically.

For bonds, the purpose is to create like what you say an annuity that promises a certain cashflow thru-out to support the living expenses. Thus, as long as long-dated bonds or perp of good quality is able to dish out above 5%(for sgd-denominated bonds), it seems a good deal to me.

The equity portfolio will provide the additional capital gain plus dividend.

The property portfolio is to depend on OPM(other people's money) to take care of fiat monetary policies and hedging against inflation and the capital gain.

Gold/silver port(very small percentage) is just to provide a disaster recovery part. Although I am using paper gold/silver as I seriously don't believe this day will come

In a way, when we are doing portfolio management, we are trying our best to produce something along the efficient frontier (ie, to have the best risk/return ratio using the asset allocation model). Do note you will have bouts of green-eyed when the equity market goes on a hyperbola but your networth is going up steadily but underperforming the equity market because of the drag of cash and bonds.

For those who are interested, you can google on a portfolio call THE PERMANENT PORTFOLIO. It seeks to take care of all scenarios, although I find the gold/silver weightage too strong for my liking. It has its critique but it seems to have withstood test of time as well.

Thank for your valuable input.
I will study this new found website & see what I can learn from it.

Just last Friday, I got my banker to check the latest bond price who I hv sold mths ago.

HutChison whampoa Perp USD bond 6% (min USD 50k) . Sold @106 on Jan13. Today price is 109 to buy. Cheung Kong infra structure Perp bond 6.625% sold at 98.25 (min US$100k). Now to buy is 100.5.

But I am quite why the Cheung Kong USD perp bond 5.375% (min US$200k) is trading at 94 ? Why the cheung Kong SDG Perp bond (SGD$250k) is trading @ 100 ?

I need to check with another banker to know why Hutichison is trading at such a high price while Cheung Kong Perp USD is trading at 94. Could it be the term is different ?

Is the min USD$ amt a investor can invest in a bond will affect the pricing ? Maybe US$50k, many retail investors can afford. US$200k not many retail investors can afford to come out such a big amt.

Even Noble Perp bond 8.5% which I sold @98. Now to buy is 102/103. Those investors who bought Noble PO perp bond in 2010 got a very good return .When Noble perp bond was launched in 2010, Noble share price was $1.80. Now it is 1.15. Such a big gap different between investing in Noble Perp Bond Vs Noble stock.

I am compiling the Perp / straight bond performance Vs the stock. Hope can find out some clue on it. It is the same as compiling ELN/FCN, I did find some clue which I can see the next few mths performance on ELN/FCN stocks. ABX gold mining stock , Apple (at high price) , China shenshua etc etc one of the many examples.






rdgs,
Vic

[focus]

Thank for your valuable input.


But I am quite why the Cheung Kong USD perp bond 5.375% (min US$200k) is trading at 94 ? Why the cheung Kong SDG Perp bond (SGD$250k) is trading @ 100 ?

rdgs,
Vic

You are comparing the yield of a similar company issuing two different bonds in two different currency and expecting it to be similar.

However, we should be benchmarking the yield of the different currency-denominated bonds against their respective country bond benchmark.

If USD bond is rated as investment grade in USD, then you check whether the yield is in line with the investment grade yield in US. likewise for SGD-denominated bonds. There might be slight variation after taking into account the tenure and terms and quality(within the investment grade spectrum).

If it's non-investment grade, you check against the non-investment grade yield of the respective country.

Maybe the banker can tell us whether my observatino is correct.

[cbsh38584]

You are comparing the yield of a similar company issuing two different bonds in two different currency and expecting it to be similar.

However, we should be benchmarking the yield of the different currency-denominated bonds against their respective country bond benchmark.

If USD bond is rated as investment grade in USD, then you check whether the yield is in line with the investment grade yield in US. likewise for SGD-denominated bonds. There might be slight variation after taking into account the tenure and terms and quality(within the investment grade spectrum).

If it's non-investment grade, you check against the non-investment grade yield of the respective country.

Maybe the banker can tell us whether my observatino is correct.

Thank again.
I will check with my banker in detail.

rdgs,
Vic

[stl67]

For PP, can follow this one. http://forums.hardwarezone.com.sg/st...lity-strategy-

Actually, some of us do have something like this but out by a bit here and there, eg rebalance the ports.

[newbie11]

Broken link

[stl67]

Broken link

http://forums.hardwarezone.com.sg/st...y-3896024.html

[starrynight]

Today's issuance:

Issuer:
Trikomsel Pte. Ltd.
Guarantor:
PT Trikomsel Oke Tbk
Structure:
Fixed Rate Senior Unsecured Notes
Issuer/Guarantor/Issue rating:
Unrated
Format:
Regulation S; Singapore (Sections 274 and 275 of the Securities and Futures Act (Cap. 289))
Tenor:
3 years
Issue Size:
TBD
Initial Price Guidance:
Mid to High 5% area
Change of Control:
Change of Control put at 101%
Financial covenants:
FCCR not less than 2.0x so long as Notes remain outstanding
Listing:
SGX-ST
Clearing:
CDP
Denoms:
SGD250k
Governing Law:
English Law
Use of Proceeds:
Refinance a portion of existing borrowings
Joint Global Coordinators:
ANZ and J.P. Morgan
Joint Bookrunners:
ANZ, J.P. Morgan and Standard Chartered Bank

[starrynight]

Commentary from Tradehaven:

Risk factors Liquidity Risk: Liquidity may be low and unable to sell in secondary market.
Issuer Risk: Clients will be fully exposed to the credit default risk of the issuer and may lose all the capital invested if issuer defaults.
Overview (From company netroadshow)
+ Leading mobile communications products distributor and retailer in the rapidly growing Indonesian mobile communications market with 30% market share within the Group's addressable market
+ Largest network in Indonesia with 1,027 retail stores across 175 cities
+ #01 retailer and prominent distributor for leading international brand names such as Apple, Blackberry, HTC, Lenovo, Nokia, Samsung and Sony
+ 2012 revenue of USD992 mio & EBITDA of USD94mio
+ Listed on JKSE since 2009 with market cap circa USD872mio
+ Recently entered into a JV with global mobile communications products distributor, Brightstar Corporation
Comments
Not alot to say about this being their maiden bond issue for a shining star of a company whose stock price has risen 627% since their IPO in 2009, compared to the main JCI Index rise of just 186% for the same period.
No comparables around as most of the Indonesian names in the USD bond world are resource/commodity stocks, besides the state owned enterprises. But I would not be surprised if this issue took off like wild fire given the success of most EM issues in the past week. Only risk would be more issues to come, which is not a bad thing especially if the coupon is lowered.
Debt leverage looks a tad high but prospects look fantastic with the american JV and much better than the indian names issuing.
It's time for Indonesia to strike back !
Question, if you could bring yourself to buy Tata and gang, Raffles Education etc, then why not Trikomsel ? Singapore has a sizeable population of NRIs' too - Non Resident Indonesians !
I would put my coupon no lower than 5.25%.

Today's issuance:
Issuer:
Trikomsel Pte. Ltd.
Guarantor:
PT Trikomsel Oke Tbk
Structure:
Fixed Rate Senior Unsecured Notes
Issuer/Guarantor/Issue rating:
Unrated
Format:
Regulation S; Singapore (Sections 274 and 275 of the Securities and Futures Act (Cap. 289))
Tenor:
3 years
Issue Size:
TBD
Initial Price Guidance:
Mid to High 5% area
Change of Control:
Change of Control put at 101%
Financial covenants:
FCCR not less than 2.0x so long as Notes remain outstanding
Listing:
SGX-ST
Clearing:
CDP
Denoms:
SGD250k
Governing Law:
English Law
Use of Proceeds:
Refinance a portion of existing borrowings
Joint Global Coordinators:
ANZ and J.P. Morgan
Joint Bookrunners:
ANZ, J.P. Morgan and Standard Chartered Bank

[starrynight]

Consent solictation re Aspial:

Aspial Bond Surprise – Consent Solicitation

April 29, 2013 by tradehaven
The former Lee Hwa.
I confess I only took notice of them last week when they were cited as a comparable bond for the Courts SGD issue.
Dragging out their balance sheet then, as I was hoping to show that Courts was unnecessarily high leveraged, and I was surprised that Aspial had a higher financial leverage ratio as of end 2012 (ard 4.4 times) than Courts (2.4 times) and only shy of Olam’s 4.9 times (estimated).
Yet their bond prices were holding the 103 handle which was easy to attribute to the relatively short tenors of their 2 papers and the retail familiarity of their name.
The announcement of the bond holders meeting last Friday is apparently to loosen their borrowing covenants further starting from Jul 2013 and again in 2014.
On the outset the proposal to up the coupon in compensation by 0.15 and 0.2 of a percentage point does look a little poor, particularly if they intend to go out and borrow straightaway (and will probably have to pay a higher rate).
Nonetheless, loosening of covenants through consent solicitation is not that uncommon especially with high yield bonds in the US. The market practice is to pay a 1 off consent fee to bondholders, and only to those who voted for the proposal. Aspial, in this case, is offering the coupon increase to the minority votes.
The first thoughts to my head were 1. Hit by Gold Price ? 2. Property launch delay ? or don’t tell me, 3. Business expansion ? Just wild guesses, and in no way speculative, so please do not take me seriously there.
The options to bondholders are simple.
1. If it is a No vote (ie. under 75%), then Aspial would have breached a covenant. The option is to put the bond back to Aspial at par, 100.00.
2. If it is a Yes vote, then you would enjoy a coupon increase yet there is a potential Aspial would borrow more money in the future at a potentially higher rate, which would potentially also jeopardise your bond price.
I cannot say anymore at this point because I am not privy to any information nor have I read the Offering Circular.
Would appreciate if anyone who has further information to share make a comment.
Aspial’s bond prices today (levels only) appear unchanged – (perhaps even the banks are not aware ?).
Aspial 4.5% 09/2014 SGD 65 mio issue size 101.50/102.25
Aspial 5% 07/2015 SGD 85 mio issue size 103.00/103.75

[amk]

Cannot comment on aspial case, however from mkt perspective it is clear many corp bonds' risk are under priced, all thanks to the easy money. I'm exiting my junk bond positions. The yield from this type of companies used to be double digits. Now even low single digit you see ppl buying.

[phantom_opera]

looks like 10y UST would test 1.5-1.6% again

USGG10YR:IND 1.63% -0.04 -2.55%

[Arcachon]

Apple (AAPL) Offers Record $17 Billion Worth of Bonds

http://news.yahoo.com/apple-aapl-off...235217369.html

[teddybear]

What is the yield?

Apple (AAPL) Offers Record $17 Billion Worth of Bonds

http://news.yahoo.com/apple-aapl-off...235217369.html

[Arcachon]

I don't buy bond because Bond understand me but I don't understand Bond.

What I know is HDB instead of getting money from CPF to build HDB apartment, now they issue Bond for less than 2.6 %.

[eminor82]

What is the yield?

5 yrs bond with 1% coupon maturity in 2018. wow really seems like easy money for them!

[teddybear]

Wow! Super lousy!

5 yrs bond with 1% coupon maturity in 2018. wow really seems like easy money for them!

[Arcachon]

Euro Weakens as Draghi Said ECB Open to Negative Deposit Rate

http://www.bloomberg.com/news/2013-0...wer-rates.html

[sherlock]

NEW ISSUE: GUOCOLAND SGD 7Y - INITIAL GUIDANCE 4.5%



ISSUER: GLL IHT Pte Ltd

GUARANTOR: GuocoLand Limited

STATUS: Fixed Rate, Senior Unsecured

FORMAT: Regulation S Bearer

ISSUE SIZE: S$100mm off its S$1.5bn Multicurrency MTN Programme (with option to upsize)

TENOR: 7 Years

INITIAL GUIDANCE: 4.5% area

Price: 101

Yield to maturity: 4.35%pa

DAY COUNT: ACT/365, Modified Following

DETAILS: S$250k by S$250k / Singapore Law / CDP / Unlisted

SELLING RESTRICTIONS: Under Section 274 and 275 of the Singapore SFA

[Rosy]

Croesus retail trust ipo looks more exciting.

http://www.financeasia.com/News/3419...d-for-ipo.aspx

next coming up Asian Pay TV trust looks even better.

http://www.financeasia.com/News/3419...apore-ipo.aspx

both projected 8%+ yield.

[starrynight]

Commentary from Tradehaven:

ALERT : Below is the email I received from my banker and the next one was sent to me by my fund manager friend.
NOTICE THE DIFFERENCE ?
NEW ISSUE: GUOCOLAND SGD 7Y - INITIAL GUIDANCE 4.5% AREA
ISSUER: GLL IHT Pte Ltd
GUARANTOR: GuocoLand Limited
STATUS: Fixed Rate, Senior Unsecured
FORMAT: Regulation S Bearer
ISSUE SIZE: S$100mm off its S$1.5bn Multicurrency MTN Programme
(with option to upsize)
TENOR: 7 Years Bullet
INITIAL GUIDANCE: 4.5% area
DAY COUNT: ACT/365, Modified Following
DETAILS: S$250k by S$250k / Singapore Law / CDP / Unlisted
SELLING RESTRICTIONS: Under Section 274 and 275 of the Singapore SFA
$$$ NEW ISSUE: GUOCOLAND SGD 7Y - INITIAL GUIDANCE 4.5% AREA $$$
ISSUER: GLL IHT Pte Ltd
GUARANTOR: GuocoLand Limited
STATUS: Fixed Rate, Senior Unsecured
FORMAT: Regulation S Bearer
ISSUE SIZE: S$100mm off its S$3bn Multicurrency MTN Programme (with option to upsize)
TENOR: 7 Years Bullet
INITIAL GUIDANCE: 4.5% area
DAY COUNT: ACT/365, Modified Following
DETAILS: S$250k by S$250k / Singapore Law / CDP / Unlisted
SELLING RESTRICTIONS: Under Section 274 and 275 of the Singapore SFA
Market Cap : SGD 2.72 bio therabouts.
Current Outstanding Bonds : SGD 1.43 bio.
My first question, if not yours ?
Why keep issuing and borrowing ? This company is not really growing even if they are building the tallest building in Singapore above Tanjong Pagar MRT station right now.
Answer : Cheap funding and since it is 65% owned by Guocogroup, better borrow than risk the share price.
Their debts (incl loans) due in a table.
mio SGD 2013 50 2014 305 2015 1,194 2016 333 2017 2,069 Headlines
Guocoland (GUOL SP): 3Q revenue S$92.4m vs S$104.5m yr ago
Risks
Parent going private. "Dec. 13 (Bloomberg) -- Malaysian billionaire Quek Leng
Chan’s HK$8.25 billion ($1.1 billion) offer to take Guoco Group Ltd. private."
This means even less transparency and heighten risk of leverage for the subsidiary.
Nonetheless, buyers rejoice. You will be making history by buying this bond.
This will be the longest tenor they have tried to issue and so this will be the lowest coupon every paid for 7 years.
Yet it is no reason not to buy if you have to buy something.
HPL just did a 7Y at 3.9% (price going 101/101.50 now), although Guocoland is twice as leveraged as HPL. Thus, 4.5% is decent premium to pay for the increased leverage and the risk of parentage change.
But a 3 bio MTN programme, means they can borrow another 1.5 bio more if they like.

NEW ISSUE: GUOCOLAND SGD 7Y - INITIAL GUIDANCE 4.5%



ISSUER: GLL IHT Pte Ltd

GUARANTOR: GuocoLand Limited

STATUS: Fixed Rate, Senior Unsecured

FORMAT: Regulation S Bearer

ISSUE SIZE: S$100mm off its S$1.5bn Multicurrency MTN Programme (with option to upsize)

TENOR: 7 Years

INITIAL GUIDANCE: 4.5% area

Price: 101

Yield to maturity: 4.35%pa

DAY COUNT: ACT/365, Modified Following

DETAILS: S$250k by S$250k / Singapore Law / CDP / Unlisted

SELLING RESTRICTIONS: Under Section 274 and 275 of the Singapore SFA

[sherlock]

Heard it was 4X over-subscribed and yield came to about 4.1%...