Sin­ga­pore on­line bond mart's top picks af­ter rough 2015

The Pak Banker - - 6BUSINESS -

It's been a rough 15 months for Sin­ga­pore's bond mar­ket. Lo­cal on­line trad­ing plat­form iFast Corp. says the losses have cre­ated some op­por­tu­ni­ties.

Prices for a bas­ket of 452 cor­po­rate notes with S$114 bil­lion ($84 bil­lion) face value gained 0.4 per­cent on av­er­age this year, af­ter the mem­bers trad­ing last year lost 1.6 per­cent, Ter­ence Lin, as­sis­tant di­rec­tor of bonds and port­fo­lio man­age­ment at the Sin­ga­pore-based in­vest­ment con­sul­tancy, said in an in­ter­view. Oil serv- ices com­pany Swiber Hold­ings Ltd. and ship­ping firm Nep­tune Ori­ent Lines Ltd. were among losers, while Hous­ing De­vel­op­ment Board and Te­masek Hold­ings Pte gained.

Sin­ga­pore's mar­ket suf­fered its first de­faults since 2009 with In­done­sian phone re­tailer PT Trikom­sel Oke fail­ing to re­pay in Novem­ber and fish­ery group Pa­cific An­des Re­sources De­vel­op­ment Ltd. in Jan­uary. Risks es­ca­lated on oil and ship­ping-re­lated debt as drillers can­celed rig or­ders from lo­cal yards and freight rates re­mained in dol­drums. Amid the in­creased credit risks are at­trac­tive coupons that will drive re­turns, Lin said.

"Ac­tive bond pick­ing ap­pears to be more rel­e­vant at this junc­ture to cap­ture the avail­able credit op­por­tu­ni­ties as op­posed to a more pas­sive 'in­dexed' ap­proach," Lin said. iFast, whose shares have risen 36 per­cent from the of­fer price in Sin­ga­pore in De­cem­ber 2014, re­ported a 41 per­cent gain in profit last year as rev­enue climbed 13 per­cent. Here are five of Lin's bond picks, which all of­fer more than the 3.89 per­cent weighted av­er­age coupon in his Sin­ga­pore bas­ket.

Aus­tralian en­ergy provider Aus­Net Ser­vices. Its 5.5 per­cent deben­tures due in 2076 yield 5.27 per­cent to their next call date, Bloomberg-com­piled prices showed. The Vic­to­ria-based power com­pany is backed by state-owned share­hold­ers Sin­ga­pore Power Ltd. and State Grid Corp. of China. The hy­brid is a rar­ity be­cause of its in­vest­ment-grade rat­ings from all three ma­jor rat­ing com­pa­nies, Lin said. It of­fers a pick-up over the 4.5 per­cent yield on sim­i­larly-rated per­pet­ual notes from As­cen­das Real Es­tate In­vest­ment Trust, he said.

Gent­ing Sin­ga­pore Plc. Its 5.125 per- cent per­pet­ual notes traded at 96.4 cents on the dol­lar on March 17 to yield 6 per­cent, Bloomberg-com­piled prices showed. They will hand in­vestors a 7.7 per­cent yield through Sept. 12, 2017, should the casino op­er­a­tor choose to re­deem the S$1.8 bil­lion se­cu­ri­ties at face value then. With $1.1 bil­lion net cash, $1.1 bil­lion in av­er­age an­nual op­er­at­ing cash flow and in­ter­est cov­er­age of 5.3 times, Gent­ing should have lit­tle dif­fi­culty in ser­vic­ing its obli­ga­tion, Lin said. Peren­nial Real Es­tate Hold­ings Ltd. Its S$125 mil­lion 4.9 per­cent 2019 deben­tures yield 4.76 per­cent. At a 353 ba­sis point spread over govern­ment bonds, the 2019 notes of­fer the meati­est pick-up among the de­vel­oper's three bonds, Lin said. More than 76 per­cent of the com­pany's shares are held by four key share­hold­ers -- Kuok Khoon Hong, Ron Sim and Pua Seck Guan -- and Wil­mar In­ter­na­tional Ltd.

Rowsley Ltd.'s S$100 mil­lion 6.5 per­cent notes yield about 7.45 per­cent, ac­cord­ing to Bloomberg-com­piled prices. The builder is backed by bil­lion­aire Peter Lim with 49 per­cent share­hold­ing while the Jo­hor royal fam­ily of Malaysia owns 12.4 per­cent.

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