Fragrance announced that they are buying back $30M of their 4.75% Nov 2021 straight bonds at 97.0. This can be interpreted as giving confidence to Fragrance bond investors. Fragrance probably do not see any meaningful use of funds over the next 3 years. They probably want to consolidate instead of growing.
But why did they not buy back the 6.125% Apr 2021 bonds instead? There are 2 good reasons:
- Buying back 4.75% Nov 2021 at 97.o will save 3% instead of buying back 6.125% Apr 2021 at 100.0
- If Fragrance buys back $30M of 4.75% Nov 2021, they will save paying $3.51M of coupons. If Fragrance buys back $30M of 6.125% Apr 2021, they will save paying $3.35M of coupons. Hence it is better for them to buy back the 4.75% Nov 2021 bonds.
Astrea V 3.85%B290620# A1 bond (5A1B.SI) is trading above par at 103.8 now, as expected.
Today is the 1st day of trading. Astrea V A2 is at 100.50 while Astrea V B is at 100.65.
Retail bonds opportunities
There are no obvious discount for retail bonds at the moment. The last time was in early Apr (http://wealthlions.com/2019/04/retail-bond-opportunities-apr-2019/) when one of the Oxley bonds was trading at close to 10% return. Although Aspial is giving 9% returns, its probably the worst business in this list.
- 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 join my Telegram Channel and subscribe to my mailing list. No spam, I promise.