SGD Corporate Bond Ideas: 24 April 2020

Timothy Ang  |   24 Apr 2020  |    61 views

  • We scan the local corporate bond universe on a relative value basis to discover bonds trading cheaper on a relative basis.
  • In a follow up to our report on rising non-call risk for callable bonds, we name some perpetual bonds we find interesting even in the event of non-call.

In our previous report ‘Rising Risk of Non-Calls’, we discussed the rising risk of non-call in this low interest rate environment, which we mentioned could lead to potentially lower refix coupons for several callable bonds if they are not called. That said, we still find value in some perpetuals in the market, even if they’re refixed in the event of non-call.

Perpetual bonds: Some offer value over their senior counterparts even if refixed

GUOLSP 4.6% Perpetual Corp (SGD) – GuocoLand Ltd

GUOLSP 4.6% Perp (6.09% yield to call) has its next coupon reset date on 23 January 2025, refixing its coupon to the prevailing SGD 7-year Swap Offer Rate (SOR) plus the initial spread of 260.9bps and a coupon step-up of 100bps. Using the SGD 7-year SOR as at 23 April 2020 of c.0.8925%, the coupon will refix to 4.5% (vs 4.6% originally at issue) and represents a yield to worst (YTW) of 4.66% at prevailing prices, an attractive senior-sub yield pick up of 132bps to the GUOLSP 3.4% ‘25s senior.

ARASP 5.2% Perpetual Corp (SGD) – ARA Asset Management Ltd

All ARA perpetual bonds come with a 300bps step up at their respective refix dates and are among the highest yielding perpetual bonds in the market. We see value in the ARASP 5.2% PERP with an 8.57% yield to call and a yield to worst of 7.05%, representing an almost 300bps YTW senior-sub yield pick up to the Senior Unsecured ARASP 4.15% ‘24s. And, in the inverted ARA curve, the ARASP 5.2% PERP offers a 28bps spread pick up to the ARASP 5.65% PERP callable 238 days later. The ARASP 5.2% PERP resets on 19 July 2024 (2 years after the upcoming call date) at the prevailing SGD 7-year SOR plus the initial spread of 312bps and a step-up of 300bps.

STHSP 3.95% Perpetual Corp (SGD) – Starhub Ltd

Similarly, STHSP 3.95% PERP offers a coupon step-up of 100bps at its reset date of 16 June 2027 and will refix to the prevailing SGD 10-year SOR plus initial spread of 171.5bps. The resulting yield to worst of 3.78% is a modest 73bps yield pick up to the senior STHSP 3.55% ’26s.

We also find the FNN curve interesting within the consumer sector, with a similar market cap (S$2.08bn) to Starhub (S$2.39bn) and a lower gearing profile of 17.6% debt to asset (vs Starhub’s 44.0%) while trading at a more attractive spreads.



Related Articles

Groupe BPCE 5% 10NC5 Tier 2 SGD

Groupe BPCE recently announced the issuance of its 10NC5 Tier 2 notes at a final price guidance of 5%.

Shawn Sng  |   27 Feb 2024

HSBC – Growth supported by higher rates

In FY202, HSBC growth was supported by higher rates and has reported a growth in its revenue of 30% YoY

Shawn Sng  |   23 Feb 2024

UBS Group 5.75% NC5.5 AT1 SGD

UBS Group recently announced the issuance of its NC5.5 Additional Tier 1 perpetual notes at 5.75%.

Shawn Sng  |   16 Feb 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