Hyflux

[jin]

Thanks yeokiwi.

I'm wondering, when they allowed hyflux to sell their retail bonds to the general public ( not all bonds can be retail and  they are  selected on some criteria )and most of the generators  say they can't recover cost , probably due to the price fixed by EMA , and if hyflux were to go under...and many moms and pops with  their retirement funds decimated.what a big hoo ha it will be since the outcome is largely blamed at the ones who fixed the prices and the ones who allowed it to be sold...

Gosh. What's happening !!

I am one of those moms and pops invested in hylux retail bonds. Rather stressful to see the market price dropping like a rock.
It went below 50cents for BTWZ today.

[karlmarx]

All this discussion about Tuaspring's ability to recover its cost or generate a profit was briefly mentioned as a risk factor in its 2016 PCS prospectus. See page 119:

'If the current challenging market landscape of low Singapore electricity prices continues, the Tuaspring power plant is expected to incur losses in 2016. As part of its asset light strategy, the Group will continue to explore divestment opportunities to recycle capital for growth.'

So Hyflux had been looking to divest Tuaspring for at least two years now. But it is only now that investors are paying attention, when coupons are halted.

[sgdividends]

Karl Marx, coupons are not halted as of now. Where u hear info?

Anyway , today they just increase the tariffs again citing higher cost of production

From my perspective , I feel the following questions have to be asked.Looking at the consultative papers at EMA website,

1) why allow such bonds to public in 2012( I can't remember exactly) ?

2) this isn't a single company that is facing difficulty. Many of the gencos ,in the many consultative papers have feedbacks that the regulated price set is too low, so if hyflux bankrupts , I wonder what's the implication given that it is not market forces at work here.

3)if u read the link provided by yeokiwi above, it SEEMS ( I didn't read too deeply) ,the gencos are played out when they have invested so much building because the price set then, were ok to make a profit , but when most of them are built, the regulated price was reduced , causing them difficulties , but they had already committed.

So back to point 1, if this is not market forces at play , why allow this bond to be retailed to mom and pop and their retirement nest egg??????????

Pls correct any of what I say above if it's untrue. And I will delete it of untrue.

[karlmarx]

Hi sgdividends. My apologies. I meant to refer to the non-call of its April 2018 Preference Shares.

I'm not sure what are the requirements for bond issuers to offer retail tranches, but I don't think SGX studies the specific business units (e.g. Tuaspring) of the issuer as a part of its process. In other words, I don't think it is SGX's (or MAS') job to ensure that Hyflux's subsidiaries are run profitably.

Hyflux preference shares was also not marketed as a retirement tool, and neither was it marketed solely to retirees. There are many instruments marketed to retail investors, and all of them carry plenty of risks; shares, cfd, bonds, etc. If the retail investor decides to DIY, the he/she must be ready to bear any negative outcome. There is a reason why the yield on Hyflux debt is priced so high when it was sold to retailers/institutions, and it is primarily due to its risk.

While Hyflux may have given the general public a positive and financially successful image, Investors need to understand that corporate bonds (or for that matter, everything) are never risk-free. Even if the government is one of its shareholder. If you are a holder of Hyflux debt, and if you think Hyflux may not be able to fulfill its debt obligations, it is still not too late to sell.

Not too long ago, I have seen yield hungry investors dump the bulk of their retirement money on Swiber bonds. Not because they actually read the offer prospectus, but that they thought too highly of their RMs as market insiders rather than as salesmen. It is painful to watch.

Earlier, cyclone posted an article on the reading habit of Todd Combs and Ted Weschler, WB's heir apparents. I thought it to be very apt for investors.

[sgdividends]

Well said karlmax.

In the end, it's buyers beware and dyodd!!

[mobo]

I'm going to say something that will probably piss off some Hyflux hybrid investors. 

At a time when fixed deposits were at record low, they bought a couple of of financial instruments which were yielding 5% - 6%, i.e. many times return of what a risk free proposition would bring. This simple fact alone would imply that the risk of said instruments are going to be significant and they have willingly accepted this risk in return for a higher interest.

I am now hearing a lot of chatter online and offline bordering self-victimization by implying government negligence or misbehavior by Hyflux. The troubles going through Hyflux now is part of the product specs, it is not an aberration due to some conspiracy. Nobody invests with the intention of losing money, but one must recognize that taking on additional risk in pursuit of greater returns is the basic tenet of any functioning market economy. Occasional loses are part and parcel of the cost of any investments.

If you are taking unmanageable sleep depriving damage from this investment, it is a reflection of gaps in your portfolio planning and risk management framework. The productive thing to do is to learn from this episode and further refine your investment and risk management strategy, not to blame the government, investment bankers or management.

[specuvestor]

^^ nothing happens I am smart and capitalism works; something happens government should warn / help socialise the cost

That’s the biggest conundrum of a capitalist republic

[ksir]

^^ nothing happens I am smart and capitalism works; something happens government should warn / help socialise the cost

That’s the biggest conundrum of a capitalist republic

haha darn well said! the oxymoron is nice!
the better way from my observation is still the middle way.



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[Behappyalways]

I have a relative who has vested more than a million dollars in the bond. My advice to him was to take a good look again and maybe cut loss. But he is not willing to cut loss. He 'consoles' himself that the govt will not let the company to collapse. This kind of thing will not happen to a govt 'related' company. Sigh....what to do .....hope he is right.....although I seriously doubt so

At a time when fixed deposits were at record low, they bought a couple of of financial instruments which were yielding 5% - 6%, i.e. many times return of what a risk free proposition would bring. This simple fact alone would imply that the risk of said instruments are going to be significant and they have willingly accepted this risk in return for a higher interest.

I am now hearing a lot of chatter online and offline bordering self-victimization by implying government negligence or misbehavior by Hyflux. The troubles going through Hyflux now is part of the product specs, it is not an aberration due to some conspiracy. Nobody invests with the intention of losing money, but one must recognize that taking on additional risk in pursuit of greater returns is the basic tenet of any functioning market economy. Occasional loses are part and parcel of the cost of any investments.

[ACTIVIST SPEAKS]

Tuas Spring as a power generator may not attract much attention, but as a desalination plant, it has its value as a strategic asset for the Singapore government. I doubt the replacement cost for a new desalination plant today is significantly lower than Hyflux's cost. Optimistically, never underestimate our government's willingness to pay to maintain national sovereignty over water availability and water self-sufficiency..... of course, I am biased becos I really hate to see Hyflux/Olivia Lum goes down.