Phillip Model Bond Portfolio: 18 August 2020

Timothy Ang  |   18 Aug 2020  |    157 views

We launch our Phillip Model Bond Portfolio consisting of wholesale corporate bond picks (minimum denomination of S$250k) for fixed income investors. The list includes bullet and perpetual corporate bonds denominated in SGD. Corporate bond investing provides a means for generating a stable and predictable income stream through the receipt of promised regular coupon payments and your invested principal back at a specified date.

Strategy commentary

Our bond picks are diversified across issuers with resilient credit profiles to weather downturns, and across a range of industries, some proving to be beneficiaries of COVID-19 trends. Singapore bond prices have rallied strongly in response to depressed interest rates, thus we’re increasingly selective for reasonable cash ask prices that offer decent yields above government bonds and inflation. The portfolio will be reviewed on a monthly basis.

Portfolio commentary

Issuers are diversified across various industries including healthcare, real estate management, logistics and e-commerce, real estate development, retail and industrial REITs, commodity, and banking. All issuers are listed entities except for ARA Asset Management; a private company previously delisted from the Singapore Exchange. There is a balanced mix of 5 bullet bonds and 5 perpetual bonds. We identify with investor wariness on perpetual bonds after the non-call event by Ascott Residence Trust, which was in response to the lower reset rates caused by the lower interest rate environment. However, given record low interest rates currently, and the perpetual bonds in our portfolio with call dates around 2 years away, we argue that there are opportunities for perpetual bonds now with a longer term view that interest rates rise as the economy recovers from the pandemic over the next 2 years.

Within the bond list, we classify the TMGSP 4.8%, ARASP 4.15%, FPLSP 4.25%, OLAMSP 4%, and MLTSP 3.65% as high grade bonds, and the ESRCAY 5.1%, ARASP 5.2%, SPHRSP 4.1%, UBS 4.85%, and AAREIT 5.65% as high yield bonds.

Bond feature definitions

  • Change of Control Call/Put. With a Change of Control Call, in the event that certain “Change of Control Events” occur, the issuer is obliged to immediately re-pay the bondholders their nominal amount invested. With a Change of Control Put, the bondholder has the option to oblige the issuer to redeem the bond in a “Change of Control Event”. The change of control clause is designed to protect investors from the bond issuing company being taken over by another person or entity during the life-time of the bond, thus changing the overall risk profile that the original bond investors signed up for.
  • Cumulative and Non-cumulative Deferral. If coupon payments are deferred or unpaid by the issuer, bondholders are entitled to all outstanding arrears if the bond has a Cumulative Deferral clause, whereas coupons payment are foregone if there is a Non-cumulative Deferral clause.
  • Dividend Stopper. The issuer and its subsidiaries shall not declare or pay any dividends if they opt to defer or not pay coupon payments to bondholders. Dividend Pusher. A trigger where the bond coupon must be paid as a consequence of a decision made by the general shareholders’ meeting to pay share dividends. The look-back period determines how far back accrued interest payments will be made to bondholders, which in some way counteracts the Cumulative Deferral clause.
  • Optional Payment. An option given to the issuer to, at its discretion, elect not to pay a distribution.
  • Loss Absorption. A common feature for bank bonds where the issuer can write-down a bond’s face value (your principal) either temporarily or permanently upon a trigger event, usually if its CET ratio falls below a certain level.
  • Cessation Put. Should the issuer’s shares cease to be traded on the exchange or are suspended for a certain period, the issuer is obligated to redeem the bond with interest accrued.
  • Make Whole Call. A provision allowing the issuer to redeem the bond early.



Related Articles

Wing Tai 4.38% 5yr Senior Unsecured SGD

Wing Tai recently announced the issuance of its Senior Unsecured notes at final price guidance of 4.38%.

Shawn Sng  |   26 Mar 2024

Phillip Macro Update – Key Points for March FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of March 2024. The meeting discussed the Fed’s monetary policy stance and economic projection.

Shawn Sng  |   21 Mar 2024

Oxley’s 6.9% Exchange Offer to the New 7.25% Notes

On 11th March 2024, Oxley announced the exchange offer for their bondholders to exchange their existing Oxley 6.9% 8July2024 notes for the new 7.25% notes.

Shawn Sng  |   12 Mar 2024


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


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066