Bond Idea : LippoMalls 7% Perp, 5.7% YTC, Supercharge yield 9 to 12%

LippoMalls 7% Perpetual bonds (Click here to learn what business LippoMalls is in)

  • Denomination : S$250,000
  • Maturity : Perpetual
  • Callable on 27 Sep 2021 and every 6 months thereafter at par
  • Coupon Reset (on 27 Sep 2021 and every 5 years thereafter) : 5Y SGD Swap offer rate (now 1.8%) + 5.245%
  • Current price : 104.0 / 104.7 (commission of 0.25% is embedded in the price)
  • YTC (at 104.7) : 5.7%

It is also possible to supercharge LippoMalls 7% perp to give higher returns. I shall share 2 scenarios:

  1. Fund $85,000 and finance the remainder at 2.3%
  2. Fund $125,000 and finance the remainder at 2.3%

1. Fund $85,000 and finance the remainder at borrow at 2.3%

  • Value of bond purchased = $250,000 x 104.7% = $261,750
  • Annual coupons received =  $250k x 7% = $17,500
  • Annual finance fees paid = (261,750-85,000) x 2.3% = $4065
  • Annual profit = $17,500 – $4,065 = $13,435
  • Capital loss in 2021 if called = $261,750 – $250,000 = $11,750
  • Amortize this loss over 4.3 years = $11,750/4.3 = $2,732
  • Annual profit after capital loss = $13,435 – $2,732 = $10,703
  • Annual net yield = 10,703/85,000 = 12.5%

2. Fund $125,000 and finance the remainder at borrow at 2.3%

  • Value of bond purchased = $250,000 x 104.7% = $261,750
  • Annual coupons received =  $250k x 7% = $17,500
  • Annual finance fees paid = (261,750-125,000) x 2.3% = $3,145
  • Annual profit = $17,500 – $3,145 = $14,355
  • Capital loss in 2021 if called = $261,750 – $250,000 = $11,750
  • Amortize this loss over 4.3 years = $11,750/4.3 = $2,732
  • Annual profit after capital loss = $14,355 – $2,732 = $11,623
  • Annual net yield = 11,623/125,000 = 9.3%

What returns are you looking at for your investments? Is 9 to 12 % annually good enough for you? If you would like to know more about how to supercharge bonds, sign up for my next bonds introduction class http://sb1.eventbrite.sg


  • I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please open a trading account to become my client; It's free!
  • WealthLions is my blog where I journal my trading ideas and share my opinions about the markets. If you like to be kept posted of my new blog posts and events, please subscribe to my mailing list. No spam, I promise.