Phillip Capital – Astrea Investor Day 2021 Highlights

Timothy Ang  |   19 Feb 2021  |    56 views

We attended Azalea’s Astrea Investor Day 2021 on 28 January 2021. Azalea, the sponsor of the Astrea bond series, gave an update on the bonds’ portfolio performances. Here are the highlights.


In 2016, Azalea, an indirect wholly-owned asset-management subsidiary of Temasek Holdings, launched its Astrea III investment products to broaden investors’ access to private equity (“PE”). The investment products were the first listed notes in Singapore backed by cash flows from PE funds. Since then, Astrea IV and V bonds have been launched, in 2018 and 2019 respectively. The Astrea IV Class A-1 Bonds were the first listed PE Bond available to retail investors in Singapore, providing an opportunity to gain exposure to private equity.

Investor demand was strong for each launch. The Class A-1 bonds for Astrea IV were 7.4x subscribed and for Astrea V, 4.5x subscribed. The popularity of PE investments among the public appears to be growing, and Azalea’s objective of issuing the Astrea bonds is to provide greater investor exposure to PE.


Figure 1: Astrea IV Outstanding Bonds

Astrea IV Outstanding Bonds

Source: Astrea


Figure 2: Astrea V Outstanding Bonds

Astrea V Outstanding Bonds

Source: Astrea

Safeguards for Astrea Bonds

The Astrea bonds have been designed to be highly safeguarded debt securities. There is also a scheduled reserves mechanism to enable timely principal repayment of the bonds at maturity. The structure must also maintain a Maximum Loan-to-Value (LTV) Ratio of 50% or less at all time. If the LTV Ratio exceeds 50%, cash will be diverted to the Reserves Accounts and, if necessary, repay outstanding Class B Bonds until the Maximum LTV Ratio is no longer exceeded.. Moreover, at issuance, the Astrea IV and V PE funds are mostly mature buyout funds with 6-8 weighted average years in their cash-generative stages.

Portfolio Performance Update

In line with the market, the total value of the Astrea portfolios have recovered above pre-pandemic levels. Including cumulative net distributions received, Astrea IV’s portfolio appreciated 5.6% from 2 December 2019 to 30 November 2020 to US$1,306mn. Similarly, Astrea V’s total portfolio value (including cumulative net distributions) grew 17.3% from 6 December 2019 to 7 December 2020 to US$1,741mn. Cash flows from the PE funds remained substantially healthy and the funds did not have to rely on credit facilities to pay out dividends or maintain operations. At the latest distribution date, Astrea IV generated US$83mn of available cash flows to pay US$13.5mn of bond interest payments. Astrea V generated US$165mn, way above the US$14mn bond interest payments. Total undrawn credit facilities remained unchanged for both IV and V at US$204mn and US$195mn respectively.

During the peak of the pandemic, the Sponsors of Astrea IV and V waived their rights to receive cash under the priority of payments and direct this cash to accelerate reserving of amounts in the Reserves Accounts. This helped to re-risk the Astrea IV and V structures. As the LTV ratio for Astrea IV had exceeded the 50% threshold by 0.1%, an additional US$1mn was deposited into its reserve account from available cash flows to bring the ratio down. The ratio was further lowered to 42.4% after the Sponsor Waiver of US$53mn. The Sponsor also waived its Astrea V cash receipts of US$12mn into the Reserve Accounts in prudence despite its LTV ratio not exceeding 50%. As of Dec 2020, Astrea IV’s LTV ratio was 32.8% and Astrea V’s 32.7%, both significantly below their 50% threshold.

Bond Performance Update

Both the Astrea IV and V Class A-1 bonds traded on the SGX showed lower volatility than the FTSE STI and have recovered to pre-pandemic levels. The greatest decline for Astrea IV was 7% while that for Astrea V was 10% from 3 Mar 2020 to 23 Mar 2020 when the market was impacted by the onset of the COVID-19 crisis. Compare this with the FTSE STI, which fell 27% to its trough in the same period.


Figure 3: Astrea retail bonds performance (green, blue) vs the Straits Times Index (yellow)

Astrea Bond Performance COVID-19 STI

Source: POEMS 2.0 Trading Platform

Bottom line

The Astrea bonds have continued to be a stable source of yields for Singaporean investors. The bonds structural safeguards include the mandatory building of reserves, maximum LTV ratio of 50% and mature PE funds that are cash generative. These not only helped secure coupon payments through a crisis, but also kept bond prices firmly stable relative to the overall market. The hunt for yield continues in this low interest rate environment, and Azalea’s Astrea bonds are something investors can consider as a fixed income investment.

Related Articles

Key points for September FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of September 2023.

Shawn Sng  |   21 Sep 2023

AIA 5.1% NC5.5 Perpetual Tier 2 SGD

AIA Group Limited recently announced the issuance of its NC5.5 Tier 2 perpetual SGD bonds with a final price guidance of 5.1%.

Shawn Sng  |   05 Sep 2023

CapitaLand Ascott Reit 4.2% 5 year Senior Unsecured SGD

CapitaLand Ascott Trust, or CLAS, recently announced the issuance of its 5-year senior unsecured bonds with a final price guidance of 4.2%.

Shawn Sng  |   30 Aug 2023


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you