Influx of Bonds Issues

I noticed there were several organisations, both government related and corporations, borrowing money for their operations in recent times. Government related organisations include statutory boards, such as LTA, HDB, JTC. Both public sector and private corporations are taking advantage of low interest rate environment to borrow money.

Just past 2 days, three bonds/preference securities were offered for subscription:

StarHub, 10-year bond Coupon rate = 3.08% p.a.
GLL IHT Pte Ltd, 5-year bond Coupon rate 4.75% p.a.
Ezion Holdings, Perpetual securities Distribution rate 7.8% p.a.

Before this, I have gotten several messages from a bank about new debt issues in the market and there were many such debts for subscription provided you have the money. If you have minimum $250,000, you can subscribe to one of them.

How many $250,000 have you got to take advantage of these various debts coming on stream?

It is clear that some organisations have better credit ratings than others and therefore can offer lower interest rates for their borrowings. The statutory boards will always have lower interest rates than the private corporations. In the private sector sphere, there are others with better credit ratings and therefore there are differences in interest rates for their bonds.

For retail investors who may not have the means to subscribe to one big bond offer, may consider professionally-managed bond funds where a smaller outlay can allow you to have a bite at bond investment.

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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