Retail Bonds and Retail Preference Shares not doing well

In the first half of this year, 4 bonds and preference shares were lodged with MAS. For the whole of last year, the number was 4. Only 1 in year 2014. None in 2013.

The table below shows the list of Retail Bonds and Retail Preference Shares traded on the Singapore Exchange (SGX). The Last Done Prices as at 26 August 2016 are provided.

Retail Bonds 26-Aug-16
No. Security Name  Last Done ($) Coupon Rate (%)
1 Aspial Treasury 5.25%b200828 0.965 5.25
2 Genting SP5.125%Perp 1.023 5.125
3 FCL Treasury 3.65%b220522 1.003 3.65
4 CapMall Trust bond3.08%210220 No trade 3.08
5 CapMall Asia 3.8%b220112 1.016 3.80
6 LTA n4.17%160510 10k 4.17
7 TigerAir 2%PerpC No trade 2.00
8 Perennial n4.65%181023 1.001 4.65
9 Oxley MTN 5%b191105 0.960 5.00
10 Aspial Treasury 5.3%b200401 0.980 5.30
11 Perennial n4.55%200429 0.995 4.55
12 Hyflux 6% PerCapSec 0.961 6.00
13 Oxley MTN b5.15%200518 No trade 5.15
Retail Preference Shares
No. Security Name  Last Done ($) Coupon Rate (%)
1 OCC 5.1% NCPS 100 105.70 5.1
2 Hyflux 6% CPS 10 97.49 6.0
3 DBS Bk 4.7% NCPS 100 106.20 4.7
4 CITYDEV NCPS 1.08 variable
5 United Engineers 7.5% cum Pref No Trade 7.5
6 FibreChem Technologies NCPS SUSP variable

The latest retail bonds issued in 2016 (ie number 10 Aspial, 11 Perennial, 12 Hyflux) were last traded below issue price of $1.00. The last number 13 (Oxley MTN 5.15%) had no trade data on Friday. The unmatched buying and asking price were $0.962 and $0.990. This does not spell good news for holders of these securities.

The older Oxley MTN 5.00% was traded at $0.960. The older Aspial 5.25% was traded at $0.965.

As for Hyflux, the newer Hyflux 6% PerCapSec (Retail Bond) was traded at $0.961. The older Hyflux 6% CPS Preference Share was traded below issue price of $100 at $97.49. In fact, Hyflux was queried by SGX as to unusual price movement of its preference shares recently.

Whilst the coupon rates (interest paid out) of these bonds and preference shares are attractive, one must be willing to accept the reduction in its value on the open market.

Should the operation of the business of the company deteriorates, its ability to pay its borrowings maybe affected negatively. Debts can quickly nose-dive if lenders wanted to exit the debts.

Copyright © 2016, 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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