Special Bond Mention by Newbie!

 A very interesting and attractive SGD bond had been launched recently that I am very excited about and can't help sharing! It is the Mapletree Logistics Trust 3.725% SGD Perpetual Bond (Factsheet | MLTSP 3.725% Perpetual Corp (SGD) (fundsupermart.com)). It is rated BBB- by Fitch (RARE FOR SGD BONDS TO HAVE CREDIT RATING) and most if not all banks/brokerages will offer financing against this bond.

If you have further queries or interest in this bond, you are advised to contact your financial advisor for advice.

POSITIVES

1. Although it is a Perpetual, it has a First Call and Reset Date of 2nd November 2026. This would mean the 3.725% coupon rate is Fixed until 2026 and if not called, the coupon rate will reset to the prevailing 5 year SORA plus the Initial Credit Spread of 2.485%. This is a positive as the Investor would be protected in the event interest rate have gone up significantly by Year 5, and Issuer decides not to call the bond, as the coupon rate would be reset higher.

2. The Issuer is a well known branded Singapore REIT brand that is approximately 33% owned by Temasek. This implies a great likelihood of financing support should the REIT face difficulties obtaining financing from traditional routes. Market Cap of Issuer is large at SGD8-9 billion.

3. This bond has a Security Rating of BBB- by Fitch. It is already relatively rare for SGD Bond Issuers to have a Credit Rating. This bond not only has a Issuer Rating, but it also has a Security Rating. With a Security Rating, most banks/brokerages will offer financing against this bond.

4. A close comparable of this bond would be Mapletree Industrial Trust 3.15% SGD Perpetual Bond (Factsheet | MINTSP 3.150% Perpetual Corp (SGD) (fundsupermart.com)). At the time of new Bond launch, Mapletree Industrial Trust 3.15% SGD Perpetual Bond was trading at about 3.2% Yield to Call, which implies that the 3.725% launch yield of this bond is relatively attractive!

5. This Issuer has a number of manageable sized bonds issued with staggered Maturity Dates. This implies good debt management by the Issuer which increase the likelihood of smooth and stable debt maturities / issuances.

NEGATIVES

1. This bond is a Perpetual Bond. The Issuer does not have the legal obligation to redeem this bond. The Investor could be holding this Investment perpetually (although the Investor can sell off this bond on the OTC market anytime at the prevailing market price).

2. This bond interest structure is non-cumulative. In the event the Issuer decides not to pay a scheduled coupon payment, there is no obligation to cumulate what the Issuer owed the Investor (there is a dividend stopper mechanism in place, if the Issuer does not pay coupons on this bond, the Issuer cannot pay distributions on the REIT units).

For disclosure purposes, Newbie declares that Newbie has a Long position in this bond mentioned above.

Credits to: External links reference Fund Supermart web pages.

Regards, Newbie

This blogpost is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information.