Retail bond yes, wholesale no

Sorry, what's the difference? As I understand it retail bond is minimum RM250k, what about wholesale?

Correction: 250k is for wholesale, retail is 1k.

so just tell RM to reserve whatever wholesale bond that's up in the market ? or is there any specific criteria for value buy bond ?

Companies & Markets
Singapore's corporate bond issuance stays robust amid low interest rates
Claudia Tan
27 May 2021
Business Times Singapore

© 2021 Singapore Press Holdings Limited

In addition, demand for corporate debt is expected to remain strong even with the prospect of rising inflation and bond yields: fixed-income experts

Singapore

BOND issuance by Singapore-listed companies has gathered pace this year as firms continued to take advantage of ultra-loose monetary policy and historically low interest rates amid the ongoing pandemic to raise funds.

In addition, demand for corporate debt is expected to remain robust even with the prospect of rising inflation and bond yields, say fixed-income experts.

Corporate bond issuance among Singapore listcos jumped 63.7 per cent to S$19.35 billion from S$11.82 billion the previous year, according to Bloomberg data. The momentum has continued so far this year; as at May 25, bond issuance in the same space surpassed S$10 billion year-to-date.

While the onset of the pandemic last year caused severe turbulence in global bond markets, things calmed down when global central banks stepped in to provide liquidity and maintain the flow of credit to households and businesses.

The year-on-year change in corporate debt issuance tends to be inversely correlated with benchmark rates (see graph), according to Tan Chu Ren, fixed income analyst, Bondsupermart Team at iFast Financial. When the five-year Singapore-dollar swap offer rate declines, corporate debt issuance tends to increase shortly after, and vice versa.

Corporate debt issuance has also consistently been in the positive region during periods of low interest rates, Mr Tan added.

Phillip Securities bond analyst Timothy Ang said that the increase in corporate bond issuance is part of the efforts by listcos here to tap lower funding rates, as well as to refinance maturing debt.

"SGX listcos are issuing bonds at cheaper rates relative to their existing bond rates, and at relatively longer tenures to lock in the rates for a longer period," he noted.

For instance, Singtel's wholly-owned subsidiary Singtel Group Treasury, had in April priced S$1 billion of subordinated perpetual securities. Singtel said that its order book closed after receiving interest of about S$2.1 billion, resulting in an oversubscription. This 10-year non-call 3.3 per cent perpetual has the longest tenure among existing Singtel bonds.

"Demand was healthy and its yield is trading very tightly or expensively to its comparable senior bonds," said Mr Ang.

Companies could also be locking in rates given that economic recovery is underway.

"Many believe that recovery is in sight, aided by the rapid rollout of vaccines," said John Kuong, assistant professor of finance at Insead.

Recent remarks by the US Federal Reserve also signalled that there could be tightening of monetary policy. Fed chairman Jerome Powell said in April that the US economy is at an "inflection point".

Companies might therefore view the current interest rate environment as an opportune time to "build up financial capacity" in order to "expand in full speed during the foreseeable recovery", according to Prof Kuong.

"Some companies that are in secular growth sectors such as industrial, manufacturing and technology need to raise funds to finance their growth expansion plans," said Edmund Leong, managing director and head of group investment banking, UOB.

Tapping the bond market also serves to diversify the investor base for issuers. "With debt financing, they could then use banking facilities to support event-driven situations such as acquisition bids or working capital needs in other jurisdictions," explained Mr Leong.

The sectors that are likely to note the most debt issuance involve two different spectrums, according to iFast's Mr Tan. They either include sectors most adversely impacted by the Covid-19 outbreak such as consumer discretionary, energy and industrials or those sectors that have fared well such as tech and consumer staples.

This year's blockbuster issuance will include Singapore Airlines' recently-proposed additional fund raising exercise to raise S$6.2 billion via mandatory convertible bonds. This is despite the national carrier posting a smaller year-on-year quarterly loss of S$661.7 million for the three months to March.

SIA chairman Peter Seah had said that the liquidity will strengthen the group's financial position during uncertain times while providing resources to "position the SIA Group for growth and leadership".

Real estate investment trusts are also a major issuer of corporate bonds, especially perpetual bonds.

"This helps to improve their gearing ratios as perpetual bonds are accounted as equity on the balance sheet rather than debt," said Mr Ang.

Even as fears of interest rate hikes have pushed US Treasury yields higher, market watchers are expecting the demand for corporate bonds to sustain.

As at May 25 5.30pm SGT, the yield on the benchmark 10-year US Treasury stood at 1.59 per cent, up from under one per cent at the start of the year.

Mr Ang said that there is still a healthy demand despite high inflation expectations and lower bond yields. But this will be centred around investment-grade or issuances from stronger names, for instance Temasek-linked listcos. "Their valuations are historically elevated, but we don't see demand waning. One key reason is their ability to get better rates from investors," he added.

On the other hand, lesser-known firms may resort to bank loans given the low borrowing cost.

Meanwhile, UOB's Mr Leong expects more infrastructure businesses to tap the debt market to issue longer-term bonds to match the sector's asset life cycle. In this regard, he expects robust investor demand for green and sustainability-linked bonds, particularly to fund projects in the renewables space.

Even so, some observers do not rule out the possibility of corporate debt issues slowing down on expectations that central banks may taper economic support and turn off the tap on easy money as a result of inflationary pressures.

"For Singapore, we may see a similar trend but we may have to rely on domestic economic conditions, movements in the benchmark rates and the cost of borrowing Sing dollar deposits for a directional read on future borrowing rates, rather than examining US labour data," said iFast's Mr Tan.

It will then boil down to whether corporates choose to raise capital through the issuance of loans, debt or equity.

"When inflation rises, corporates that can pass on higher costs to consumers are also in a better position to borrow at higher interest rates. Such businesses may be in the consumer discretionary sector such as automobile companies," said Mr Tan.

Singapore Press Holdings Limited

Tq for all your replies, bro,... Yes, I'm already into USD FDs with DBS. But,... how do you buy the US Corporate Bonds ?

Here I show an example of the 2.4% AAPL bond due on 20230113. (Note the maturity date format on IB is shown as YYYYMMDD format). I am not sure whether to select SMART(TradeWeb) or just TradeWeb, haven't tried either one yet. Maybe dwRK knows which exchange to route to for bonds?

" Here I show an example of the 2.4% AAPL bond due on 20230113. "

Bro,... if the coupon rate is 2.5%, I might as well put into DBS USD FD's today which yield me close to 3.6% for 1-mth tenure, interest deposited every mth-end,..

Why go for a 2.4% p.a. return and have capital loss risk too ?

Uhm... You should read more about bond pricing...

The yield and actual returns has nothing to do with the coupon. It's the current yield to maturity that matters if you hold it for about 2 months till maturity. The coupon rate is the YTM at the instance of issuance and is a meaningless figure once the bonds are floated. It's only used for identification purposes.

The YTM for the AAPL bond is 4.47% p.a. https://bondfacts.finra.org/AAPL4562449?

If in doubt, use Excel' XIRR to compute the returns.

I know abt YTMs, and all.

Since you did not put down the price of the AAPL bond in your above input, I presumed it is fixed-price. Hence, I just computed by using the 2.4% indication.

We don't normally call it 'instance of issuance'. We call it PAR VALUE.

Look at my input for the Frasers Green Bond,... it talks abt the current coupon rate at a price which is currently below par value.

I don't like to use the Term : Yield-to-Maturity (YTM). Maturity can be extended dependant on the terms of the bond.

Edit : You shld buy more bonds to take advantage of bond returns in a rising interest rate environment. Use the practical terms outside,... not the book terms from the financial analysts.

I showed several links earlier in the SSB/T-bills thread. https://forum.lowyat.net/index.php?showtopi...ost&p=105771228

I saw some solid news today abt China being really keen on opening-up,... I think,... I'll skip T-Bills-lar,...

Standby my money for China-related instruments.

But I'll chase the SSB.

probably doesn't matter... goes to same tradeweb marketplace...

HKD money is converted to USD today. I tried with SMART. Fees range from 2-9 USD.



But if you try TradeWeb or IBKRATS, the fees are guaranteed to be 2 USD only.



I guess TradeWeb/IBKRATS is a better option. Otherwise I end up getting charged 9 USD.

under smart... you can further configure your routing options... these affects the fees you pay...

ibkr won't know how your order(s) will be split/taken up until its execution... so will give you a range of fees in the preview page

you can manually select all the individual market to try see which give you the 9...

I did this when I sold my shell... because it can be routed to so many exchanges throughout Europe... so wanna make sure I paid the lowest fees... for US products, usually the marketplaces are quite limited...

Can you check if this setting is correct? No bond settings available... only stocks and options.



TWS only allow to choose from IBKRATS and TradeWeb.

When I try IBKRATS, it says specified destination exchange is not allowed. No commissions are mentioned.



When I try TradeWeb, it says only marketable orders are accepted. I will wait US market to open at 8am Eastern to resumbit my order. This one charges 2 USD min.



I studied a bit on TradeWeb. It's popular for high yield junk bond trading.