01-12-2017, 08:53 AM
(30-11-2017, 12:28 PM)specuvestor Wrote: [ -> ](29-11-2017, 11:15 PM)wonghw12 Wrote: [ -> ]To make it less confusing, perpetual bonds are a special class of bonds. Bonds are typically senior to preferred stock, according to the above investopedia. But the seniority of perpetual bonds, which are not the usual bonds, are defined separately. In this case, I believe the Hyflux perpetual bonds are as senior as the preferred stock.
This may sound academic until crap hits the fan. I think perps though might be classified as equity on accounting balance sheet, will still be deemed as bonds and above pref in terms of seniority of claim
Happy to learn if it is otherwise.
I'm not sure if i follow what is going on. Why is there a link between perpetual bonds, BTWZ (perpetual capital) and N2H (preference shares)?
OIS for the Perp can be found here: http://infopub.sgx.com/FileOpen/Hyflux_L...leID=29202
Best thing to do is to use the search function using "seniority, pari passu, default" etc - it's a long and longwinded document.
1. Page 42 states:
The Securities are structurally subordinated to any and all existing and future liabilities and obligations of the Issuer’s subsidiaries, associated companies and joint ventures.
Most of the Issuer’s assets are shareholdings (direct and indirect) in its subsidiaries, associated companies and joint ventures. Both the timing and the ability of certain subsidiaries, associated companies and joint ventures to pay dividends may be constrained by applicable laws. In the event that the Issuer’s subsidiaries, associated companies and joint ventures do not pay any dividends or do so irregularly, the Group’s cash flow may be adversely affected. As a result of the holding company structure of the Group, the Securities are structurally subordinated to any and all existing and future liabilities and obligations of the Issuer’s subsidiaries, associated companies and joint ventures. Generally, claims of creditors, including trade creditors, of such companies will have priority with respect to the assets and earnings of such companies over the claims of the Issuer and its creditors, including the Securityholders to the extent that amounts are due and payable under the Securities. For the avoidance of doubt, the Securities will rank pari passu with the S$400,000,000 6.00 per cent. cumulative non-convertible non-voting perpetual Class A preference shares, the S$300,000,000 in aggregate principal amount of 5.75 per cent. perpetual capital securities and the S$175,000,000 in aggregate principal amount of 4.80 per cent. perpetual capital securities issued by the Issuer. The Securities will not be guaranteed.
2. It seems though that this need not always be the case. (for future issuances, if any)
Pg 64: In these Conditions, “Junior Obligation” means any ordinary shares of the Issuer and any class of the Issuer’s share capital and any other instruments or securities (including without limitation any preference shares, preferred units or subordinated perpetual securities) issued, entered into or guaranteed by the Issuer that ranks or is expressed to rank, whether by its terms or by operation of law, junior to the Securities. => I read this to mean that any future perps or pref can be junior to N2H and BTWZ, so it seems that seniority between perpetual capital and preference shares is not strictly defined unlike that between bonds and common equity.
3. I'm not sure why people link this to a bond? The issue name is Perpetual Capital Securities.
When i do a search in the OIS with 197 pages, i find 7 instances of the word bond, out of which 1 relates to chemical bonding, and the rest are used in a generic context of which most appear in the later pages in the instructions on how to apply at the ATM.