Hyflux 6% perpetual callable 2020

[WolfT]

Interesting stuff.

BTWZ is now @ 0.71 - i have started buying some this mng.

Price has fallen from 0.89 from the start of this thread i.e. 20% fall in ~2mths.

I still think Hyflux is likely to not call N2H, but continue paying coupons.

flat yield for BTWZ for next 2yrs is 0.06/0.71=8.45%, stepping up to >10% (looking @ where 4y SOR is now). 

decent levels for a measured sized bet.

dyodd.

If you think Hyflux will not call back N2H, why do you buy now? Is it not better to buy BTWZ then because it(BTWZ) will drop a lot more when it happen.

[tanjm]

Interesting stuff.

BTWZ is now @ 0.71 - i have started buying some this mng.

Price has fallen from 0.89 from the start of this thread i.e. 20% fall in ~2mths.

I still think Hyflux is likely to not call N2H, but continue paying coupons.

flat yield for BTWZ for next 2yrs is 0.06/0.71=8.45%, stepping up to >10% (looking @ where 4y SOR is now). 

decent levels for a measured sized bet.

dyodd.

If you think Hyflux will not call back N2H, why do you buy now? Is it not better to buy BTWZ then because it(BTWZ) will drop a lot more when it happen.

The market has probably already taken this into consideration. I see no change in fundamentals from last time I looked. I bought some too.

[AQ.]

If you think Hyflux will not call back N2H, why do you buy now? Is it not better to buy BTWZ then because it(BTWZ) will drop a lot more when it happen.

1. I can be wrong!     It is not impossible that hyflux does call N2H. N2H will definitely rally, but i think BTWZ will also rally in this case (at least momentarily).

2. I had felt BTWZ was trading too high previously. The 2018-2019 OTC bonds were yielding ~10% on the mids (in general the yields seem to be rising constantly but the small size of the issues meant the spread were wide and thin). If 1-2y paper yields 10%, i thought i needed a larger MOS for the perps. @6-8%, a price of 0.7 gives 8.5-11%, which i deem fair.

The question is: If hyflux does not call N2H, but continues to pay, what kind of yield will the market require? I do not know, but current yields are juicy enough for me.

3. It is also not impossible for hyflux to not call, and not pay (i think it is rather unlikely and highly foolish to do. If Hyflux does decide to do so, it just might mean the end of Hyflux in one form or another eventually). The only way to protect myself is to limit my size bet.

[gzbkel]

Credit Initiation Report @bondsupermart
https://www.bondsupermart.com/main/share...Report.pdf

[CY09]

Hi Gzbkel,

Thanks for the report, it allows me to know the various bonds Hyflux has and how they are faring. I noticed both Hyflux bonds and Perps are now offering double digit yields. It is interesting that all 5 financial instruments experience a decline in prices in the same time period. Its preference shares and preps are at an all time low

<No longer vested>

[weijian]

I will put the trial information in this perp thread because I think it will allow VBs to re-read history and learn better with past context.

The 6 banks are probably Australia & New Zealand Banking Group, BNP Paribas SA, Bank of Tokyo-Mitsubishi UFJ, DBS Group Holdings, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp, while Maybank refinance their Tuaspring loan (and also the one to end up holding the baby when Hyflux defaulted). It is also interesting to note that DBS and Maybank were also the underwriters for the retail perps/prefs that they issued. I guess that's how banking relationships work - interest income and non-interest income are synergistic

Hyflux founder, ex-CEO Olivia Lum was determined to win Tuaspring bid, prosecution says

Their alleged non-disclosures took place after a consortium of six banks expressed serious concerns about new “merchant sale risk and operational risk” when they learnt about Hyflux’s strategy of using the sale of electricity to subsidise the sale of water to PUB.

“The banks took the risks of Hyflux’s power business plan so seriously that in January 2011, they jointly issued a side letter to Hyflux stating that they could not lend money to Hyflux on the same terms that had previously been indicated in the October 2010 in-principle commitment letters,” deputy public prosecutor (DPP) Christopher Ong said in court.

DBS, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation – three of the six banks – extended financing of S$150 million for the construction of the desalination plant in the Tuaspring project.

However, Hyflux eventually aborted this financing and ultimately financed the Tuaspring project by a shareholder’s loan of S$840.4 million in October 2011, which was in turn refinanced by Maybank Singapore and Maybank Kim Eng Securities in September 2013.

Hyflux subsequently issued the preference shares to fund the Tuaspring project, because of the challenges it faced in obtaining financing from the banks. The preference shares were oversubscribed and the offer amount was increased to S$400 million.

https://www.businesstimes.com.sg/compani...ution-says

info of the 6 banks: https://theedgemalaysia.com/article/hyfl...ridge-loan