Chartered's Debt Rating Lowered to Junk!

[Trex101]

http://www.bloomberg.com/apps/news?pid=206...QrKA&refer=home

 

Looks like really more good yrs ahead.....

 

http://www.bloomberg.com/apps/data?pid=avimage&iid=iJfeZUQzfwiQ

Quote:

Aug. 14 (Bloomberg) -- Chartered Semiconductor Manufacturing Ltd., the world's third-largest made-to-order chipmaker, had its debt rating lowered to junk at Fitch Ratings, which cited concerns over rising debt levels.

 

Chartered's senior unsecured debt and long-term foreign currency issuer default ratings were cut to BB+, one level below investment grade, from BBB-, Fitch said in a statement today.

 

The Singapore-based chipmaker said on July 25 it will report a loss in the third quarter and won't be consistent in posting profits, leading Morgan Stanley, Goldman, Sachs & Co. and JPMorgan Chase & Co. to slash their share-price estimates on the company. Chartered also raised its planned spending for the year to $750 million, from an earlier budgeted $590 million.

 

``The company's operating and financial performance has been lackluster,'' Fitch said in the statement. This reflects ``sustained margin pressures and a sharp deterioration in break-even levels.''

 

Junk bonds, classified as high-yield and high-risk debt, can raise a company's borrowing costs as a lower debt rating increases the perceived risk of a company's inability to pay debt.

 

Credit-default swaps on Chartered jumped 12.5 basis points from before the downgrade to 247.5 basis points, according to Barclays Capital's prices. That means it costs $12,500 more a year to protect $10 million of the company's debt from default for five years. A basis point is 0.01 percentage point.

 

The downgrade also pushed up the extra yield investors demand above U.S. Treasuries to buy Chartered Semiconductor's $300 million 6.25 percent bonds maturing in 2013. The spread widened 4 basis points to 418 basis points, BNP Paribas SA's prices show.

 

Chartered shares have slumped 43 percent this year, underperforming the 19 percent decline in Singapore's benchmark Straits Times Index.

 

To contact the reporter on this story: Andrea Tan in Singapore at [email protected]; Patricia Kuo in Hong Kong at [email protected].

[Mustank]

wahzz bro man

 

i thot SCB's debt rating plunged to junk

[Clubace]

6.25% yield for 5 yrs.

 

Better than OCBC preference shares.

 

Worth taking a look.

 

Available in US market only right?

Edited August 14, 2008 by Clubace

[Nkps]

[Trex101]

You got to be kidding, with downgrade to Junk rating, this company could go bust. OCBC preference shares still are safer.

[Shull]

does temasick has a hand them? don't think temasick will let them go bust..

[Booboon]

every senior management is only intrested to do politics instead of turning the company over, of course reduce to junk lah.

[Ticklish8]

CSM or chartered not worth investing or buy. I remember during the peak Chartered price touch $19..... then go do down... $10.... $7.... $5..... $1.... n now less than 0.60 cents.

 

The problem is compared with Taiwan semiconductor (which incidently is the number 1 n 2 in terms of the biggest wafer fab in the world), Chartered is just small fry. The have huge outlay of capital and they need that huge capital infusion (ie you pour in millions, they bleed money lost money)

Edited August 14, 2008 by Ticklish8

[Chongster]

6.25% yield for 5 yrs.

 

Better than OCBC preference shares.

 

Worth taking a look.

 

Available in US market only right?

 

distressed debt investors look for at least 20% IRR....

[Kb27]

Wah..Temasek should come and buy now.

Or maybe they are stuck with millions of shares already.

[Ticklish8]

Temasek already own 60-70 percent of CSM if I remember correctly.... This is one company bleeding money........ almost every quarter lost money... ie make loses no profit

[Kb27]

That's what I thought.

Temasek seemed to be hitting the wrong horse most of the time.

...and they have high-powered pow chiat people inside.

[Espire]

You got to be kidding, with downgrade to Junk rating, this company could go bust. OCBC preference shares still are safer.

 

Dun worry, Temasick will give them big big injection until they swollen.. buay tahan and need to vomit many month of bonus to their employees.

[Albeniz]

Any Chartered employee in this forum?

[Sosaria]

IMHO, CSM seems like just a 'showcase' company to prove that singapore has the requisite wafer fab technology. Not sure why their strategy does not work. Or maybe a lot of investment was made on 'showcase' type of technology and equipment, and supporting local R&D, rather than focusing on the business of manufacturing for profits. Also they recently bought over the former HNS wafer fab in tampines. I bet the japs were glad to be able to sell it off .

Edited August 14, 2008 by Sosaria

[Albeniz]

IMHO, CSM is just a 'showcase' company to prove that singapore has the requisite wafer fab technology. Not sure why their strategy does not work. Or maybe a lot of investment was made on 'showcase' type of technology and equipment, and supporting local R&D, rather than focusing on the business of manufacturing for profits. Also they recently bought over the former HNS wafer fab in tampines. I bet the japs were glad to be able to sell it off Sly.

 

IMHO, I think CSM's role besides being a wafer fab, functions more as a training ground to churn out engineers with the necessary Fab skill sets. This way, Singapore could attract companies like Intel-Micron or Qimonda to come here to build Fabs. Without our local pool of engineers, Intel-Micron or Qimonda would have to fly their engineers (from their own countries) over which can be very expensive.

 

The building of highly expensive Fabs here by these overseas MNCs (like Intel-Micron/Qimonda) would in turn boast other economic areas like construction, creating jobs in other sectors. Although Chartered may be losing money, it helped to rake in money in another way.

[Lokech34]

Ya looks good from outside but rotton from inside man.

 

Share can even goes to $16 plus a few years ago & free fall to less than 60 cents.

 

You want to give it a try. At your own risk.

[Lokech34]

Then temasick will have to tighten their belt well or else it will just too losse and drop off.

 

Ya temasick made hell lots of money from others investment but ended have to help pay deth for the loss son.

 

What will you do if you are one of the boards of directors.