Genting Singapore, who just had issue the same 5.125% coupon perpetual bonds to investors in large tranches are now making another 500mil available to retail investors in smaller tranches.
- You will have to subscribe a minimum of $5000, after which you can apply at an increment of $1000
- You can apply this by going to the ATM just like how you would apply for an IPO
- This bond will go on forever, but it is callable after 10 years on Oct 2022.
- If it is not call back, after which the interest will become 6.125%
- Perpetual bonds have no redemption date, which means you are likely never going to see your capital again
- This security will be traded on the SGX exchange in sizes of 1000
Important Dates to take note of
- Coupon will be paid every April 18 and October 18 of the year
- Opening date of application under public offer: April 10
- Last date and time for application under public offer: April 16 at 12:00 noon
- Balloting results: April 17
- Issue date: April 18
- Listing of security: April 19
To be honest perpetual bonds to the issuer is never cheap. The cheapest was Singpost’s issue and the best bond seem to be the one issued by Mapletree Logistic Trust.
This one looks tad low, but it is still better than putting your money in the bank. We are at the lowest point in interest rate, and the likely scenario would be for interest rates to move up. Perpetual bonds are heavily impact by interest rate movements.
To stop the greed of subscribing for the higher than fixed deposit coupon rate, think about this, why would Genting Singapore heavily issue perpetual bonds now? Perhaps they are preying on the public for any thing above the pathetic fixed deposit rates. They should be able to earn a higher return on assets than this 5%.
If you are a reader of this blog, you would know that hitting 5% is not difficult in the Singapore context. Yet perpetual bonds do have its advantage. For one under normal recession condition, it will still go down, just not by more. For folks more risk adverse this security still have its use.