Genting Singapore, who just had issue the same 5.125% coupon perpetual bonds to investors in large tranches are now making another 500mil available to retail investors in smaller tranches.
- You will have to subscribe a minimum of $5000, after which you can apply at an increment of $1000
- You can apply this by going to the ATM just like how you would apply for an IPO
- This bond will go on forever, but it is callable after 10 years on Oct 2022.
- If it is not call back, after which the interest will become 6.125%
- Perpetual bonds have no redemption date, which means you are likely never going to see your capital again
- This security will be traded on the SGX exchange in sizes of 1000
Important Dates to take note of
- Coupon will be paid every April 18 and October 18 of the year
- Opening date of application under public offer: April 10
- Last date and time for application under public offer: April 16 at 12:00 noon
- Balloting results: April 17
- Issue date: April 18
- Listing of security: April 19
To be honest perpetual bonds to the issuer is never cheap. The cheapest was Singpost’s issue and the best bond seem to be the one issued by Mapletree Logistic Trust.
This one looks tad low, but it is still better than putting your money in the bank. We are at the lowest point in interest rate, and the likely scenario would be for interest rates to move up. Perpetual bonds are heavily impact by interest rate movements.
To stop the greed of subscribing for the higher than fixed deposit coupon rate, think about this, why would Genting Singapore heavily issue perpetual bonds now? Perhaps they are preying on the public for any thing above the pathetic fixed deposit rates. They should be able to earn a higher return on assets than this 5%.
If you are a reader of this blog, you would know that hitting 5% is not difficult in the Singapore context. Yet perpetual bonds do have its advantage. For one under normal recession condition, it will still go down, just not by more. For folks more risk adverse this security still have its use.
Additional Information
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BC
Monday 5th of November 2012
Please don't compare a fixed rate callable security to an essentially floating security (which is guaranteed up to 50K by SDIC).
It's not right and you should know it.
It's like comparing a BMW to a bicycle.
Jimmy
Friday 4th of May 2012
it's true that the singapore banks' deposit rates (http://www.dbs.com/sg/personal/deposit/default.aspx ) are really low now but I would be wary about jumping into something that they are pushing so aggressively.
B. C.
Tuesday 17th of April 2012
Hi Drizzt, Pref Share (PS) holders ARE allowed to attend AGM (IIRC) in so far as they were NOT paid in full the previous year's dividends- this hasn't been tested in SG I believe because NO COMPANY would want to endure the embarrassment of having such PS holders go KPKB at their AGMs. These 'Perpetual Subordinated Capital Securities' (PSCS) however do not seem to have the right to KPKB in the event that their 'distributions' have been deferred thus my insistence that until and unless the PSCS distributions are fully paid, no preference share holder NOR Ordinary share holder ought even dream of receiving a dividend/ distribution and that the law should attest to that. What do you think- logical?
B.C.
Monday 16th of April 2012
Hi Drizzt, The term for the Genting offer is PERPETUAL SUBORDINATED CAPITAL SECURITIES and it seems that, according to poster 'final1' @ http://forums.hardwarezone.com.sg/stocks-shares-indices-92/genting-singapore-perpetual-subordinated-capital-securities-5-125%25-3679888-6.html#post65821831 that holders of these capital securities don't even have preference share (PS)holder rights. Could it then be said that these PERPETUAL SUBORDINATED CAPITAL SECURITIES are even riskier than PS? Thanks for your comment in advance.
Drizzt
Monday 16th of April 2012
i am not certain of this, but how big of a price are u pricing in when u evaluate the purchase of such instruments. to be fair even preference shares are not accorded the normal voting rights.
KZ
Thursday 12th of April 2012
The mgt had previously guided that the money might be used for a potential opportunity in North Asia
Drizzt
Thursday 12th of April 2012
thanks for the update KZ