Retail Bond opportunities (Apr 2019)

by

SIA 3.03% 240328 (SQ1B.SI) made its debut a few days ago in SGX. I got some of it by applying through the ATM. 3.03% is nothing to shout about, it simply allows me to beat inflation. I think the risks are low as it is lending money to our national flagship carrier that is 54% owned by Temasek Holdings.

In my opinion, the retail bond that is standing out at the moment is Oxley MTN 5% b191105 (BJFZ.SI). I find the current price of this bond mis-priced in the market now. Here are my reasons:

  • This Oxley bond yields a high return (9.4%) and earlier maturity than the other Oxley bond in the retail bond space. The 5.15% MTN b5.15% 200518 (BTNZ.SI) bond yields 7.45% and matures 1 year later in 2020.
  • It also yields a higher return that the couple of Aspial bonds which has a lower credit standing as compared with Oxley. Oxley has better cashflow and lower debt ratios compared with Aspial. And the Aspials mature 1 year later.
  • This Oxley MTN 5% b191105 (BJFZ.SI) is likely to declare XD end of this month, which may not be priced in yet.
  • There is a OTC 250,000 Oxley 5.7% 2022 corporate bond which at the price of about 91 now, yields about 10% YTM now. Though this yield is slightly higher, it matures 3 year later than the above 5% retail bond.

Before buying, investors should consider whether Oxley will be able to redeem this bond on 5 Nov 2019. The amount to redeem is $300M. Will Oxley be able to sell their Mercure and Novotel Hotels valued at $950M by then? You can read the latest news and analyst reports of Oxley here : https://sginvestors.io/sgx/stock/5ux-oxley/analyst-report.

Please make your own judgement.

Notes:

  • The liquidity of Oxley bond is not good. It is easy to buy $10,000, but very difficult to buy $100,000 without push up the price.
  • I already own some Oxley retail bonds and added some more today.
  • The retail Oxley bonds are not marginable.
  • All the retail bonds in the above table can be bought using SRS.
  • I'm a remisier with Maybank Securities, 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!