(18-05-2015, 11:40 AM)greengiraffe Wrote: [ -> ]Thanks everyone for pointing out text book theory.
I understand what u guys are pointing out. Unfortunately we are living in extraordinary times and hence at this point where there is abundance of liquidity due to Central Bank interventions, even bonds are deemed risky largely due to pricing.
Hence the perception of being principal guarantee is flawed. Since its risk taking, I would rather assume calculated risks.
3+% for 7 yr to me is deemed too risky. For users of OPM, such rates will be highly affordable as returns on embarking on projects will definitely be much higher than such levels.
GG
(18-05-2015, 10:13 AM)morten Wrote: [ -> ]GG. If everyone feels the same way you do on Fixed income, we will not have a FI industry.
In a bond... investors are assured that they will be paid back the principal amt (barring bankruptcy) with pinpoint & predictable interest income annually.
As for equity, no investor is sure what the sh price will be nx month or nx year, let alone 7 yrs in this case. No investor can also be sure what the dividend payout will be in the nx 7 years.
** All the above is on the assumption that bond holders will hold to maturity.
your words are so biased, because you are vested in FCL stocks
To each his own... biased or not its up to personal view. Everyone's circumstances is different.
When I was loading FCL, noone appears interested. When FCL tookover ALZ, quite a number were skeptical.
Now they are slowly going asset light... noone quite take notice. However when they are issuing 3.65% 7 yr bond, everyone appears so interested and forgotten that global bond prices have soared so much...
I supposed retail are starved of bond offerings and have little feel of how toppish bond markets are and sentiment on bonds have changed.
Anyway, if u feel 3.65% with no upside is ok for you, pls go ahead and provide FCL with 7 year cheap $. As a shareholder, I am more than happy that FCL can locked in cheap funding for next 7 years.
GG
your words are so biased, because you are vested in FCL stocks
I agree with greengiraffe points. His views are rational and logical.
Even if I have cash, I wont buy this bond. Good for the bond issuer. But the best deal is for FCL.
(18-05-2015, 12:00 PM)Happymeowmeow Wrote: [ -> ] (18-05-2015, 11:40 AM)greengiraffe Wrote: [ -> ]Thanks everyone for pointing out text book theory.
I understand what u guys are pointing out. Unfortunately we are living in extraordinary times and hence at this point where there is abundance of liquidity due to Central Bank interventions, even bonds are deemed risky largely due to pricing.
Hence the perception of being principal guarantee is flawed. Since its risk taking, I would rather assume calculated risks.
3+% for 7 yr to me is deemed too risky. For users of OPM, such rates will be highly affordable as returns on embarking on projects will definitely be much higher than such levels.
GG
(18-05-2015, 10:13 AM)morten Wrote: [ -> ]GG. If everyone feels the same way you do on Fixed income, we will not have a FI industry.
In a bond... investors are assured that they will be paid back the principal amt (barring bankruptcy) with pinpoint & predictable interest income annually.
As for equity, no investor is sure what the sh price will be nx month or nx year, let alone 7 yrs in this case. No investor can also be sure what the dividend payout will be in the nx 7 years.
** All the above is on the assumption that bond holders will hold to maturity.
Considering the lack of retail bonds, limited high interest deposits, low property yields (the perennial favorite) and govt bonds @ ~2%; A 3.65% bond looks set to absorb some of the liquidity in the market.
Excluding equity and other more volatile financial instruments, this issue presents reasonably good value for the general mom and pop fund. I'd think given the unique situation of excess liquidity and limited options, unlike overseas bonds, this will probably sell out and even trade above par.
That being said, Frasers may have just discovered a rich vein of cheap financing for future expansion.
(18-05-2015, 01:25 PM)greengiraffe Wrote: [ -> ]To each his own... biased or not its up to personal view. Everyone's circumstances is different.
When I was loading FCL, noone appears interested. When FCL tookover ALZ, quite a number were skeptical.
Now they are slowly going asset light... noone quite take notice. However when they are issuing 3.65% 7 yr bond, everyone appears so interested and forgotten that global bond prices have soared so much...
I supposed retail are starved of bond offerings and have little feel of how toppish bond markets are and sentiment on bonds have changed.
Anyway, if u feel 3.65% with no upside is ok for you, pls go ahead and provide FCL with 7 year cheap $. As a shareholder, I am more than happy that FCL can locked in cheap funding for next 7 years.
GG
I dont think no one noticed the modus operandi of Chaoren
Key variable for the debate of equity vs bonds is the price of each asset class when interest rate is moving up. Bonds have been bubbly for the past 12 months since the fed signal their intention and the market's been trying to fight the fed; but global equities are not far behind
It's an ugly contest. Textbook answer for both asset classes is to move to quality and visibility
I don't think that FCL is paying a very cheap rate.. if compared to capitaland family
CMA 10 year bond only paying 3.8%
and CMT 7 year bond they only paying 3.08%... and FCL 7 year is paying 0.57% more compared to CMT
FCL overall debt portfolio is also pretty high... I think around 5%, considering for property companies their ROE is usually below 10 or even 8%
Comparison is endless. Capitaland got govt backing sure lower lah...
I trust real businessmen better than civil servants. I think Capland made a lot more mistakes than truly privately run companies. Capland's REIT platform hardly moving now, ie Capland is already asset light with very little pipeline assets to shift - a real concern if you ask me.
So long as Towkay delivers, I happy liao especially now that his FCL plans is getting more visible.
Vested and Of Course Biased
(18-05-2015, 05:47 PM)Happymeowmeow Wrote: [ -> ]I don't think that FCL is paying a very cheap rate.. if compared to capitaland family
CMA 10 year bond only paying 3.8%
and CMT 7 year bond they only paying 3.08%... and FCL 7 year is paying 0.57% more compared to CMT
FCL overall debt portfolio is also pretty high... I think around 5%, considering for property companies their ROE is usually below 10 or even 8%
Agree with GG.
If you go to yahoo finance and compare Capland vs UOL vs CDL over a the long term. You will witness the clear difference in management.
Thanks buddy.
UOL IMHO is the best since they have the benefit of a banker and his family running it.
They have absolutely no plans for going asset light at all since they are hard core old school.
Overtime, they build up a portfolio of assets that benefits from asset inflation and more importantly a recurrent cashflow that will flow through to shareholders.
CDL, I m not too sure as they have literally gone to sleep after almost fully developing the landbank amassed under Kwek Hong Png's era.
Capland is famous for momentum accumulation of landbank then constantly making provisions when property cycle peaks. Even the sale of WestGate Office to Sun Venture/LKH speaks so much of the foresight of Capland mgt in view of the coming Sing - Msia high speed rail that has its terminal at Jurong East. At least they would have enlarged the portfolio of CCT via some financial engineering but they opted to sell outright - Capland so big cannot afford to hold on to WestGate Office?
Vested
FCL (Core), CDL, UOL (odd lots), Capland, K Land (not vested)
(18-05-2015, 06:25 PM)postage paid Wrote: [ -> ]Agree with GG.
If you go to yahoo finance and compare Capland vs UOL vs CDL over a the long term. You will witness the clear difference in management.
I am a little curious, probably newbie-ish in the FI arena, but are these bonds which FCL issued at any point of time redeemable by the company at market price? or must it be redeemed at par?