Investing ideas for high yield bonds

Top grade bonds that can be supercharged using margin accounts are few. I was asked recently what are the junk bonds (high yield) bonds that have caught my eye. I have listed some bonds that looks interesting and have ordered them according to my preference. Admittedly, i have yet to dive deep into these companies as I do not plan to invest in them.

  1. Sabana 4% Mar 2018, price 99.0, YTM 5.5%
  2. Sabana 4.25% Apr 2019, price 96.0, YTM 6.8%
  3. Religare Heath Trust 4.5% July 2018, price 99.7, YTM 4.8%
  4. CWT 4.8% 2020, price 99.8, YTM 4.9%
  5. Ara 5.2% perp, price 103.5, YTC 4.4%
  6. Centurion 5.25% July 2018, price 100.7, YTM 4.4%
  7. Tuan Sing 4.5% Oct 2019, price 98.2, YTM 5.3%
  8. Tuan Sing 6% Jun 2020, price 100.5, YTM 5.8%
  9. Tat Hong 4.5% Jul 2018, price 99.0, YTM 5.6
  10. G8 Education May 2019, price 99.9, YTM 5.5%
  11. Oxley 6.375% 2021 USD, Price 100.4, YTM 6.2%
  12. Aspial 5.05% Jun 2019, price 100, YTM 5%
  13. Tiong Seng 4.75% Jan 2018, price 100, YTM 4.7%
  14. TA Corp 5.5% Mar 2018, price 97.5, YTM 9.4%
  15. Banyan Tree 5.75% Jul 2018. price 101.1, YTM 4.6%
  16. Banyan Tree 5.35% Nov 2018. price 100.4, YTM 5.0%
  17. Pacific Int Lines 7.25% Nov 2018, price 99.8, YTM 7.4%

Note that these bonds are not investment grade and hence cannot be margined at good rates. The prices used are from prices which is only a guide to the real prices and does not include any commission.

The market agrees with my view of SGD interest rates

When i ask investors who attend my seminars if SGD interest rate will increase in 2017, the majority took the view that Singapore will match US Fed increasing interest rates. For me, I have always told them that I will not be so sure if I were them.

My reasons are:

  • US economy doing well, is Singapore economy doing well?
  • If we follow US rates as we have been known to do so historically, won’t our currency be much stronger than our neighbouring countries? Won’t this make us noncompetitive? As far as I know, all asian countries, including China, are devalueing their currency.
  • I am a very keen bond investor, and have observed corporate bond market rally. Interest rates cant be increasing too much when smart institutional money are buying bonds.

Well, I have been proven right. While the US interest rate has increased 3 times in the last 7 months, look at what happened to our SGD interest rates. Its at 2017 low.

Note that I am not an economist, but I do keep abreast of macroeconomics.