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Important Events
- On Friday, the Bank of Japan released its summary of opinions of their Monetary Policy Meeting on 21-22 September 2021. In the meeting, Bank of Japan will continue to support financing of firms and stability of financial markets. It will maintain current monetary policy measures including the Support Financing in Response to the Novel Coronavirus. Policy measures will ease when Japan achieves its price stability target of 2%.
- Last week, the Basel Committee on Banking Supervision published results of its Basel III monitoring exercise based on bank information as of 31 December 2020. It was found that the minimum required Tier 1 capital for Group 1 banks would have to increase by 2.9% as compared to a 1.8% increase as at 31 December 2019. Capital shortfalls however were lower at EUR 6.1b for Group 1 banks, smaller than the EUR 10.7b shortfall as at end December 2019. The weighted Liquidity Coverage Ratio (“LCR”) for the banks increased to 143% but seven banks recorded an LCR below 100%. In contrast, only one bank had an LCR of lower than 100% at the end of 2019. This was because most banks used their reserves during the Covid-19 pandemic which left them with a lower amount of liquid assets.
Asian High Yield Bond Index
- The Barclays USD Asia High Yield Bond Index dipped 1.00% for the week ending 1 October 2021.
- On Monday, Sunac China report that the Group repurchased part of its SUNAC 7.500% 01Feb2024 Corp (USD) at a cost of USD 33.6m.
- On Tuesday, China Evergrande Group reported that the Group sold its 19.9% stake of Shengjing Bank to a state-owned enterprise Shenyang Shengjing Finance Investment Group for around RMB 10b at RMB 5.7 per share. After the sale, Evergrande Group will still own around 14.6% stake of Shengjing Bank. Evergrande’s liquidity has affected Shengjing Bank and the proposed transaction is expected to provide some stability to the operation of the bank. As a requirement of the terms of the disposal, Shengjing Bank has asked Evergrande to settle financial liabilities owed to the bank from this disposal. In addition, this morning, shares of China Evergrande Group were halted as the company is expected to announce a major transaction soon.
- On Wednesday, Guangzhou R&F Properties reported that the Company suggests establishing a joint venture together with major shareholders, in order to co-develop property projects and/or property-related investments. R&F Properties will hold 51% stake of the joint venture. The proportion of total commitment attributable to the Company to the joint venture will be up to RMB 10.8b. Major shareholders will own the remaining 49% with the proportion of total commitment from these shareholders amounting to up to RMB 10.4b.
Interest Rates and Currencies
- The US dollar gained 0.3% against the Singapore dollar last week with the USD/SGD currency pair at 1.3571. The 2-year SGD Swap Offer Rate (“SOR”) increased by 2 basis points (“bps”) to 0.5513% while the 10-year SGD SOR increased by 7 bps to 1.7150%.
- The yield of 2-year US Treasuries (“UST”) decreased by 1 bps to 0.2638% while the 10-year UST yield increased by 1 bps to 1.4616%. 10-year USTs saw a run up to as high as 1.5374% on comments last month from Chairman Powell informing that the Fed could start bond purchase tapering in November. Other central banks such as the Bank of England have indicated to raise rates, triggering a surge in bond yields globally.
Corporate Updates and New Issues
- On Monday, Sembcorp Marine updated shareholders on the use of proceeds from the rights issue from 2021 and will use SGD 430m of the SGD 1.5b raised to repay a loan facility.
- On Monday, LMIRT Management announced the reset of the SGD 140m 7.00% subordinated perpetual securities. The perpetual notes have been reset at a new distribution rate of 6.4751% per annum on 27 September 2021 and the next reset date will be on 27 September 2026.
- Also on Monday, Frasers Property Limited re-opened the FPLSP 3.000% 09Oct2028 Corp (SGD) and priced a second tranche amounting to SGD 100m of the bonds to form a single series with the original notes.
- On Tuesday, Keppel REIT announced Mr Koh Wee Lih will be appointed as Chief Executive Officer of Keppel REIT. Mr Koh has 25 years of experience in investment, corporate finance and asset management. He is currently the Executive Director and CEO of AIMS APAC REIT Management Limited. He will step into the position from 1 December 2021.
- On Wednesday, Ronshine China completed open-market repurchases of its 10.5% senior notes due 2022 in the principal amount of USD 5.0m, representing 1% of the aggregate principal amount of the Notes issued. On Thursday, the issuer further repurchased USD 3.0m of the same notes via open-market transactions.
- On Wednesday, Chip Eng Seng Corporation Ltd. announced that the company was selected by the Housing and Development Board as the replacement main contractor for the remaining building works to be undertaken for the Build-To-Order housing project at Marsiling Grove in Woodlands. The project was previously contracted to Greatearth Corporation but the company ran into financial difficulties and was unable to finish the development.
- On Wednesday, Sembcorp Industries announced the issue of its maiden sustainability-linked bond (“SLB”) at a final price guidance (“FPG”) of 2.66%. The tenor of the issuance will be 10.5 years and will mature on 6 April 2032. This issue is anchored by an investment of SGD 150m from the International Finance Corporation (“IFC”). It is also IFC’s first investment globally as an investor in a SLB. Investors may read our views on the new issue here.
- On Thursday, CapitaLand China Trust (“CLCT”) secured a sustainability-linked loan of SGD 150m from UOB. This sustainability-linked loan will incorporate interest rate reductions based on pre-determined sustainability performance targets for CLCT such as maintaining minimum reductions in carbon emission, energy and water usage. Proceeds of the loan will be used for general working capital and corporate funding requirements, including financing or refinancing of investments.
- On Thursday, AIMS APAC REIT announced a proposed acquisition of 100% freehold interest of a property located at 1 Woolworths Way, Bella Vista, New South Wales 2153, Australia. The acquisition is subject to the approval by the Foreign Investment Review Board of Australia. The purchase price for the acquisition is approximately AUD 463.25m (~SGD 454.0m) and is funded by a combination of debt financing, Acquisition Fee Units and the net proceeds raised from the issuance of perpetual securities.
- Olam International Limited announced its sixth sustainable issuance of JPY 5.5b five-year sustainability-linked notes on Thursday. The private transaction was issued at a 1.403% coupon rate, which will step down according to the achievement of certain Sustainability Performance Targets. Note proceeds will be used for general working capital and other corporate purposes.
- On Friday, UOL announces that they have secured a SGD 540m sustainability-linked loan pegged to Singapore Overnight Rate Average (SORA). The five-year loan will be used for general corporate purposes and refinancing of existing loan facility.
- On Friday, Tuan Sing Holdings Limited announced a tender offer exercise for bondholders of its outstanding 7.75% notes due 2022 to sell their holdings back to the issuer for cash. The purpose of the tender offer exercise is to manage its debt capital structure by extending its debt maturity profile and optimise financing costs. Additionally, the Company will issue new SGD fixed rate notes under their SGD 900m Multicurrency Medium Term Note Programme (“MTN Programme”). The deadline for the tender order exercise will be on 14 October 2021, 10am and the announcement of the pricing of their new Notes will tentatively be on or about 7 October 2021.
- Singtel updated that it will sell a 70% stake in Australia Tower Network to AustralianSuper, Australia’s largest superannuation fund, for approximately AUD 1.9b. Of this amount, AUD 0.9b will be paid for the share sale consideration, AUD 0.5b as return of capital from Australia Tower Network Pty Ltd to Singtel, and the remaining AUD 0.5b as a full repayment of the loan owed to Optus Mobile Pty Limited, a wholly-owned subsidiary of Singtel. The transaction is expected to be completed in October.
- Keong Hong Holding Limited updated the exchange that Mr Chiang Yi Shin will be appointed as the company’s new Chief Financial Officer with effect from 1 October 2021. Mr Chiang was Group Financial Controller of AGV Group Limited between October 2020 and March 2021, and CFO of Chemical Industries (Far East) Limited between April 2019 and October 2020.
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