Nam Cheong, Roxy-Pacific issue bonds totalling S$135m
Singapore
AS Greece struck a bailout deal and Chinese stock markets stabilised somewhat, liquidity continues to stay resilient in the local bond market with two deals worth S$135 million announced on Tuesday.
Offshore support vessel builder Nam Cheong's S$75 million three-year fixed rate notes were priced at 6.5 per cent, while property and hospitality group Roxy-Pacific's S$60 million three-year fixed rate notes were priced at 4.5 per cent. The bonds were issued at par.
Bankers said the local bond market was looking better than at the beginning of the year, but investors are still cautious.
Nam Cheong's notes were issued under its S$600 million multi-currency medium-term note programme. The latest Series 4 Notes are expected to be issued on July 23, 2015, and to mature on July 23, 2018.
Orders in excess of S$125 million from 28 accounts were received, said DBS Bank, which is a joint bookrunner to the deal along with CIMB Bank Berhad and RHB Securities Singapore.
"We're encouraged ... if we had tried to do it in the beginning of the year, it wouldn't have been possible," said Clifford Lee, DBS head of fixed income, in a phone interview.
He said he is seeing some more US dollar and Chinese yuan issuance come up this week, and when the market stabilises more, Singapore dollar issues will come.
Net proceeds from the Nam Cheong issue will be used to partly refinance Nam Cheong's S$110 million 6 per cent fixed rate notes due Nov 5, 2015, a Nam Cheong announcement on Tuesday morning said.
The pricing of the latest Series 4 Notes contrasts with the company's Series 3 Notes, where investors snapped up S$200 million worth of five-year bonds at a yield of 5.05 per cent in August 2014. The new Series 4 notes are priced in line with the market, given that Series 3 Notes due 2019 are trading at about a 7 per cent yield, Mr Lee noted.
For the hard-hit oil and gas sector, Mr Lee said that the market will distinguish companies with stronger fundamentals from weaker ones. Bond deals will start flowing again once oil prices stabilise near current levels and contracts are announced, he said.
Mr Lee added that due to the lack of liquidity in the still-nascent bond market, current depressed prices only reflect trading at the margins. Buyers find they cannot get enough supply, he noted.
Meanwhile, property and hospitality group Roxy-Pacific has issued the first set of notes from its recently established S$500 million debt issuance programme. The S$60 million 4.5 per cent three-year notes are expected to be issued on July 20, 2015, and mature on July 20, 2018.
United Overseas Bank is the sole bookrunner.
Net proceeds of these Series 1 Notes will be used for general corporate purposes, such as repayment or refinancing of existing borrowings, financing investments, general working capital or capital expenditure.
Ronny Chng, UOB group head of investment banking, said in an e-mail that investors are generally selective about the bonds they invest in due to the uncertain global economic outlook.
"We expect bond issuance volume to be flat going into the second half of the year and it will be dominated by high-grade bonds," he said.
