Sale of Perpetual Bonds in Singapore
There has been a quantum jump in the sale of Perpetual Bonds in Singapore this Year. The sale this year alone surpassed the combined sales of last 15 years. The upper limit of the market for Singapore dollar Perpetual Bonds is still being tested with Neptune Orient Lines perpetual about to be released and bonds of Wilmar International and Ascendas in the offing.
The advantage of Perpetual Bonds is that they are treated like equities under rules and the companies can raise funds without any maturity date. Though at present these bonds are being lapped up by investors, it is felt that this enthusiasm may wane in the near future. Experts feel that the market is getting saturated.
This is partly because, the perpetual launched by casino resort Genting Singapore become extremely successful and absorbed $1.8 billion from the market. The perpetual has already secured orders of about $6m, bankers have been discussing a repeat launching to soak this amount. This has resulted in pressure on the value of Genting perpetual, which is currently being marked at 99.50. Experts feel that the market may not be ready for another perpetual soon.
The success of Genting affected the sale of perpetual released one week later by Mapletree Logistic Trust which could get only $350 million out of anticipated S$500 million, though it paid slightly more return.
Driven by the investor sentiment, a total amount of S$ 3.062 billion was raised by five corporate perpetual since January, which itself is more than last 15 years. With another three deals coming, the subsequent perpetuals may not perform well unless the yield offered is higher.
Meanwhile, NOL dealing with Container Shipping, which is planning to launch a perpetual soon, may have to try hard to market it. The company reported a loss of US $ 320m in the fourth quarter last year. According to IFR, the Standard Chartered, OCBC, HSBC and DBS would be the joint leads of this offer.
Another company which is planning for launching a perpetual bond is the Agri group Wilmar. This company, which deals with edible oils, has oil palm plantations in South-East asia and its operations are spread all over Asia.