IFR Asia – September 30, 2017

COUNTRY REPORT SINGAPORE

Vibrant said, at the close of the exchange
offer last Thursday, some 29.5% or S$29.5m
of the existing bonds were offered for an
exchange into three-year notes at a yield of
7.5%. The company said it would not extend
the offer.
Settlement of the accepted notes for the
exchange will take place on Tuesday. The
new notes will be listed on the Singapore
Exchange.
The offering was launched on September
14 after the Singapore-listed freight-
forwarding company unveiled plans to
redeem the perps at par on the October
11 call date. The notes were sold in April
2014.A 1% one-time fee was given as an
incentive for holders of the perps to swap
them for the new three-year notes, which
come off a S$500m multi-currency debt-
issuance programme.
Vibrant said it also planned to offer the
new bonds to new investors. DBS was sole
dealer manager on the exchange offer and
dealer on the new issue.

› GALLANT WORKS ON BUYBACK

Singapore-listed GALLANT VENTURE is seeking
consent to redeem S$230m of 7% bonds
due April 6 2018 to pave the way for their
buyback.

The consent will also require investors

to waive any potential event of default that

could be triggered by new borrowings of

the company or its subsidiaries in the form

of one or more loans from banks to fund

the bond redemption.

Gallant is also asking for a call option to

be inserted in the bond agreement to allow

for the buyback.

A consent fee of 0.15%, or S$375 of the

principal amount, will be paid on condition

that the proposed refinancing is completed.

The Indonesian industrial and resort

property developer will buy back the bonds

at par, slightly above current cash price

indications of around 98.00. An incentive

of 0.35%, or S$875 of principal amount, will

also be paid to holders applying to sell the

notes by October 10.

DBS and Standard Chartered Bank are joint

dealer managers on the consent and bond

buyback.

SYNDICATED LOANS

› SPH RAISES S$280M BILATERAL

SINGAPORE PRESS HOLDINGS has raised a S$280m

(US$206m) four-year bilateral loan from OCBC.

The borrower on the financing, which is

unsecured, is wholly owned SPH subsidiary

Times Properties.

Funds are for the provision of

shareholders’ contributions to Elara 1

and Callisto 1, each of which is an equally

owned joint venture company of SPH and

Kajima Development, according to the

press release.

The loan agreement was signed on

September 12.

On June 21, SPH announced that the

Housing & Development Board had

awarded to Elara 1 and Callisto 1 the

tender for a site at Upper Serangoon Road

in Singapore. The JV will develop the

site, featuring a mix of commercial and

residential spaces.

SPH is listed on the Singapore Stock

Exchange.

RESTRUCTURING

› AUSGROUP GETS LOW ACCEPTANCE

AUSGROUP ’s debt-to-equity exchange offer has

found a low take-up among the holders of

its S$78.051m (US$58.1m) of 7.95% notes

due 2018.

The oilfield services company said

the submissions to exchange the bonds

OCBC achieves tight covered spread

„ Bonds Singapore bank’s five-year euro covered offering converges with Australian spreads

OVERSEA-CHINESE BANKING CORP achieved the

tightest spread for five-year euro covered

bonds from Asia to show that European

investors have taken to Singapore covered

bonds a year after first entering the market.

OCBC, rated Aa1/AA–/AA–, began

marketing €500m (US$588m) of five-year

covered bonds at mid-swaps plus 5bp area,

before refining it to 1bp area, plus or minus

1bp.

It ended up pricing flat to mid-

swaps, and 1bp inside implied fair value.

Outstanding 2022 euro covered bonds

from OCBC and UOB were seen flat to mid-

swaps, but both mature in March 2022.

So, it was thought OCBC would need to

pay 1bp for the extra seven months. UOB’s

March 2021 covereds were seen 1bp inside

mid-swaps and DBS’s seven-year covereds

were at plus 6bp.

Notably, the pricing even beat primary

offerings from the more established

Australian covered issuers. Euro covered

bonds from the major Aussie banks were

seen 1bp–2bp inside mid-swaps, having

tightened in secondary trading in recent

months, but the tightest new-issue spread

was mid-swaps plus 2bp for National

Australia Bank’s €1.25bn five-year in March

this year.

“A year ago, Singapore covered bonds

were trading 5bp wide of the Aussies,” said

a source close to the issue. “Over time,

the differential has compressed to almost

nothing.

“Before, there was a lot of focus on

liquidity and whether the Singapore banks

were going to issue frequently, but investors

have seen that each of them are going to

issue at least once a year.”

The increased investor interest could be

seen in the order book, which was over €1.7bn

at final pricing. Around 70 accounts placed

orders, compared with around 50 in earlier

Singapore covered deals.

Singapore banks only started issuing euro

covered bonds in March 2016, when UOB

priced the first notes, but improving investor

demand has been seen in the tightening

spreads this year.

In January, DBS issued its euro seven-year

at mid-swaps plus 15bp, then, the following

month, UOB priced a five-year at plus 10bp

and, in March, OCBC sold a debut five-year

at plus 7bp. They have since tightened 7bp–

10bp in secondary trading.

Geographically, Germany bought 51% of

the bonds, the UK took 14%, Italy bought 7%,

Benelux booked 6%, Switzerland took 5%,

the Nordics bought 5%, the rest of Europe

booked 8%, and Asia Pacific and Middle East

investors bought a combined 4%.

Banks bought 34%, central banks and

official institutions booked a combined 32%,

fund managers took 23%, corporate investors

bought 4%, and others took 7%.

Red Sail is the guarantor on OCBC’s

covered bonds, which have been backed

against Singapore residential mortgage

loans. The offering is expected to be rated

Aaa/AAA (Moody’s/Fitch).

Barclays , BNP Paribas , Credit Agricole , DZ

Bank , JP Morgan and OCBC were joint lead

managers.

DANIEL STANTON