Sabian Turbocharged April 10, 2012 Share April 10, 2012 They don't have to redeem at par??? I thought perpetual bond means up to them when they want to redeem? ↡ Advertisement Link to post Share on other sites More sharing options...
Jrage 1st Gear April 10, 2012 Share April 10, 2012 They don't have to redeem at par??? I thought perpetual bond means up to them when they want to redeem? I think they can buy back from the open mkt. Technically, no need to "redeem at par". so if the mkt is low e.g. 250k becames 230k. They can buy the bond back from the mkt. Link to post Share on other sites More sharing options...
Sabian Turbocharged April 10, 2012 Share April 10, 2012 I think they can buy back from the open mkt. Technically, no need to "redeem at par". so if the mkt is low e.g. 250k becames 230k. They can buy the bond back from the mkt. So it means, if there is no liquidity and the company doesn't feel like redeeming, you just sit there and suck thumb and kwai kwai collect interest payout? Is the interest payout guaranteed or also"subjected" to some microscopic clauses that depend on a multitude of events that will void the need to pay out interests? Link to post Share on other sites More sharing options...
FastFastCar Neutral Newbie April 10, 2012 Author Share April 10, 2012 No I don't think it means they can don't redeem at par but can choose when they want to redeem at PAR, can the gurus correct me if I am wrong? So technically they can choose to hold the bond to perpuity hence the name. Link to post Share on other sites More sharing options...
2009k Neutral Newbie April 10, 2012 Share April 10, 2012 So it means, if there is no liquidity and the company doesn't feel like redeeming, you just sit there and suck thumb and kwai kwai collect interest payout? Is the interest payout guaranteed or also"subjected" to some microscopic clauses that depend on a multitude of events that will void the need to pay out interests? Suck Thumb is nice... Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 I bought the original $250K bonds and I am regretting it now as it is trading below par. This issue, however, is likely to be oversubscribed since the quantum ($5K) is small. Its probably cos they decide to issue S$1.8B instead of the initial S$500M to S$800M as initially set out. A bit tough to digest for the market. Its an art, issue size too small, no liquidity. Too big, too many seller（large supply), take long time to digest. What DBS(the bookrunner) should have done is to issue maybe S$1B, then retap a couple of times at slightly above par. Now, they are going to the retail investor to get funds. However, they are probably not going to 'lose' money per se, cos there is no accrued interest, the price builds in the interest.. By right assuming current price of Genting is 99 on the institional tranche(250K per lot), after 6 month, the price on the retail tranche should be approx 101.6%. However markets are not always perfectly efficient, so small variations can occur. Link to post Share on other sites More sharing options...
Jrage 1st Gear April 10, 2012 Share April 10, 2012 (edited) So it means, if there is no liquidity and the company doesn't feel like redeeming, you just sit there and suck thumb and kwai kwai collect interest payout? Something like that.. but bond you can trade, so you can sell to other if you need liquidity... the only think is the price , but if you heng get this ipo bond, shld not lose $$. :) Bond is for retirees..Sit back and take $$. but i wont touch genting.. i halal :P Edited April 10, 2012 by Jrage Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 I cant remember that formula I learned, think it is probably this: PV = A/r PV of perpetuity A is amt of periodic payments r = discount rate Need to know how much it is priced. I/r unlikely to go high up for the next 1-2 yrs...assuming all else constant...given such, a drop in bond price very unlikely. Those minibonds that collasped, if I didnt read wrongly were hybrid and its underlying assets were subprime assets packaged by so call "insurance" to make it attractive or of investment grade... as long as the bond issuer is of good and sound financial standing then it is worth it...at 5.125% not a bad return... Mini-bonds were not bonds. They are notes, in which CDOs(many of which were highly rated by the ratings agancies) are collateralised against CDS-es taken out on the reference entities. Link to post Share on other sites More sharing options...
Cars08 1st Gear April 10, 2012 Share April 10, 2012 If Im not wrong...company only redeem debt when there is a better financing avenue, that is, interest savings for them to do so...otherwise, buying the bond up equates to pushing bond prices higher.... if u r an investor and you know that the company is buying up their bonds or u call it refinancing..there will be punters out there pushing up the price of the bond ..when u talk abt surbordinated loan...it means surbodinate to a loan agreement...if Im not wrong...bond price is affected by discount rate...hence, under rising i/r environment, price of bond will drop....given their inverse relationship... Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 So it means, if there is no liquidity and the company doesn't feel like redeeming, you just sit there and suck thumb and kwai kwai collect interest payout? Is the interest payout guaranteed or also"subjected" to some microscopic clauses that depend on a multitude of events that will void the need to pay out interests? In most cases, perps have what we call "dividend stopper" language. ie they can legally not pay you your interest without going bankrupt provided certain conditions are met. But by doing that, they obviously won't be able to get any more money from the market, so they'll generally be keen to keep the credit lines open.. Do read the fine print and see if you're comfortable with it. Link to post Share on other sites More sharing options...
Macrotrust Neutral Newbie April 10, 2012 Share April 10, 2012 go and check the prospectus if there is any call feature for early redemptiuon by either party otherwise no redemption as it is perpetual maybe can sell at secondard market if yield is low. the martket price should be up and yeild low. can call your rm for exit price. why u invest in bond, for retiree only stable cash flow not for quick buck....to buy n sell. Link to post Share on other sites More sharing options...
Sabian Turbocharged April 10, 2012 Share April 10, 2012 Suck Thumb is nice... If only it's that easy Link to post Share on other sites More sharing options...
2009k Neutral Newbie April 10, 2012 Share April 10, 2012 If only it's that easy It is easier to stick to dividend paying stocks and find the right entry point... Don't need to sweat so much when it comes to investment... Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 go and check the prospectus if there is any call feature for early redemptiuon by either party otherwise no redemption as it is perpetual maybe can sell at secondard market if yield is low. the martket price should be up and yeild low. can call your rm for exit price. why u invest in bond, for retiree only stable cash flow not for quick buck....to buy n sell. I have yet to see an issue where there is no clause to call back... There is almost always a clause for issuer to call earlier. Almost, cos i obviously have not seen all the bond issues in the world.. Link to post Share on other sites More sharing options...
Sabian Turbocharged April 10, 2012 Share April 10, 2012 (edited) Something like that.. but bond you can trade, so you can sell to other if you need liquidity... the only think is the price , but if you heng get this ipo bond, shld not lose $$. :) Bond is for retirees..Sit back and take $$. but i wont touch genting.. i halal :P If there's trading liquidity. I never liked genting. long time ago, no money undergrad, fell for their "opening special" for first world hotel. knn, the hotel was only 3/4 complete. at night can hear the drilling work and no freaking warm water!! and the carpet on my floor was sloshing with water when you stepped on it. (probably some leak somewhere not rectified). since then, it's condemned in my books. was disappointed they got the sentosa bid. saving grace was they roped in universal for the theme park otherwise, if they recreate the same "theme park" as what they have on that highland... Edited April 10, 2012 by Sabian Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 No I don't think it means they can don't redeem at par but can choose when they want to redeem at PAR, can the gurus correct me if I am wrong? So technically they can choose to hold the bond to perpuity hence the name. You are right, correct understanding. But i am hardly a guru; cos if I am i no need to work. Link to post Share on other sites More sharing options...
Sabian Turbocharged April 10, 2012 Share April 10, 2012 In most cases, perps have what we call "dividend stopper" language. ie they can legally not pay you your interest without going bankrupt provided certain conditions are met. But by doing that, they obviously won't be able to get any more money from the market, so they'll generally be keen to keep the credit lines open.. Do read the fine print and see if you're comfortable with it. Thanks. Nice explanation for a layman like me Link to post Share on other sites More sharing options...
Tedlhw 5th Gear April 10, 2012 Share April 10, 2012 go and check the prospectus if there is any call feature for early redemptiuon by either party otherwise no redemption as it is perpetual maybe can sell at secondard market if yield is low. the martket price should be up and yeild low. can call your rm for exit price. why u invest in bond, for retiree only stable cash flow not for quick buck....to buy n sell. Not entirely true. I have clients who likes to trade junk bonds/distressed debt, very exciting.... The last time we were playing Sino Forest debt... ↡ Advertisement Link to post Share on other sites More sharing options...
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