Download - Fixed Income Trade Notes
PUBLIC#
10 December 2021
Fixed Income Trade Notes
PUBLIC#
Content
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Methanex Corp 5.25% 2029 (USD)
Peak Re BVI 5.35% perpetual c.2025 (USD)
Bristish Telecommunications PLC 3 December 2021
M&G plc 6.5% 2048 c.2028 (USD)
UPL Corp Ltd 4.625% 2030 (USD)
San Miguel 5.5% perpetual c.2025 (USD)
Power Finance Corp. 4.5% 2029 (USD)
21 September 2021
Shui On Development (Holding) Ltd 5.75% 2023 c.2021 (USD) 24 September 2021
Open Trades: USD
Description Date Published/Updated
29 September 2021
4 October 2021
18 October 2021
Scentre Group Trust 4.75% 2080 c.2026 (USD) and 5.125% 2080 c.2030
(USD) -
Open Trades: GBP
Open Trades: SGD
Description
17 September 2021
28 October 2021
29 October 2021
12 October 2021GLP Pte. Ltd. 4.5% perpetual c. 2026 (USD)
14 September 2021
27 August 2021
9 September 2021
Celestial Miles Ltd 5.75% Perpetual c.2024 (USD) 12 October 2021
7 October 2021
Franshion Brilliant 4% perpetual c.2023 (USD) 8 October 2021
MAF Global Securities 5.5% perpetual c.2022 (USD)
SoftBank 4.625% 2028 (USD)
NWD Finance 4.125% perpetual c.2028 (USD)
Fosun International (Fortune Star) 6.85% 2024 c.2023 (USD) and 5.95%
2025 c.2023 (USD)
GENM Capital Labuan Limited 3.882% 2031 (USD)
Nordstrom Inc 4.375% 04/2030 (USD)
Ford Motor Credit 4.125% 2024 (SGD)
Description Date Published/Updated
4 October 2021
Mapletree North Asia Commercial Trust 3.5% perpetual c.2026 (SGD) 20 August 2021
3 September 2021
Olam International 5.5% perpetual c.2022 (SGD) and 4% 2026 (SGD)
9 September 2021
Date Published/Updated
Shimao Group 5.2% 2027 c.2024 (USD) and 4.6% 2030 c.2025 (USD)
12 October 2021
12 October 2021
Virgin Media Secured Finance 4.25% 2030 c.2024 (GBP) 22 October 2021
PUBLIC#
Key risks
Sustainalytics ESG risk rating
NEGL LOW MED HIGH SEVERE
Manpreet Gill Abhilash Narayan 0-10 10-20 20-30 30-40 40+
Head Senior
Investment UPL Corp. Ltd 28.9
Medium
RiskFICC Investment Strategy
Cedric Lam
Senior Investment Strategist
Source: Sustainalytics
We favour UPL Corp. Ltd (UPL) for its leading position in
the global agrochemical industry and its position as the
largest player in the post-patent crop protection market. We
also like its well-diversified geographical footprint across
regions and product groups. Moreover, UPL benefits from
relatively stable earnings, owing to the defensive nature of
the industry, as demand is less sensitive to recessions or
economic cycles such as the pandemic.
UPL Ltd - Consolidated financial information
In USD million equivalent, unless stated. As of Q1 FY 2022
(31 June 2021). LTM = Last 12 months
Source: Bloomberg, Standard Chartered
* As of FY2021 (31 March 2021)
The debt-funded acquisition of Arysta in January 2019
made UPL the fifth-largest agrochemical company globally.
The complimentary nature of the two companies in terms of
product portfolios and geographies further improves UPL’s
overall business profile. We also remain confident in UPL
for its collaboration with other players in the industry, which
could lead to improvements in research and development
and obtaining manufacturing rights to certain products.
In our assessment, UPL Corp. Ltd 4.625% 2030 (USD)
(ISIN: XS2189565992, Price: 105.673, YTM: 3.85%) offers
relative value compared with UPL Corp. Ltd 4.5% 2028
(YTM: 3.48%). It also stacks up favourably versus other
large agrochemical companies providing 162bps pick-up
over Bayer 4.375% 2028 (YTM: 2.31%) and 92bps over
Syngenta 5.182% 2028 c.2028 (YTW: 3.03%), after
adjusting for UPL’s smaller size.
Ratings downgrade risk to High Yield (HY) as S&P has
the company on negative outlook
Regulatory risks stemming from industry regulations that
can impact operations and restrict its manufacturing.
Low and negligible risk-rated companies constitute part of Standard
Chartered Bank’s Sustainable Investments universe, which is a
subset of the CIO office’s equity core universe
Total Debt* 3,336
Total Equity* 3,360
Total Debt/EBITDA* 2.9x
EBITDA/Interest Expense 2.9x
Total Debt/Total Assets 34.7%
Weather and crop-related risks due to the nature of the
industry
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
28 October 2021, 7:00 PM SST
Fixed Income Trade NoteUPL Corp Ltd Summary of bond recommendations
Revenue, Adj (LTM) 5,342
EBITDA, Adj (LTM) 1,171
Net Income, Adj (LTM) 413
Total Assets* 9,627
UPL Corp Ltd 4.625% 2030 (USD) BUY
Rationale: Defensive credit, attractive yield
Aggressive M&A could lead to a further deterioration in
credit metrics
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 28 October 2021 at 6:29 pm SST
PUBLIC#
Standard Chartered Bank
Wealth Management Chief Investment Office | 28 October 2021, 7:00 PM SST
About the issuer
Bond structure
UPL Corp Ltd 4.625% 2030 (USD)
The issuer, UPL, operates primarily in the post-patent segment of the crop protection market, and through its subsidiaries,
it has successfully expanded its crop protection and post-harvest solution businesses. Its crop protection products include
fungicides, herbicides, insecticides, and plant growth regulators and fumigants. Its acquisition of Arysta in 2019
strengthened and expanded its portfolio of products as it offers crop protection solutions for niche and specialty crops.
UPL Limited recorded a revenue of USD 1,154mn (up 11.8% y/y) in Q1 FY22 (ending 30 June 2021), primarily due to
higher contribution from India, Latin America and North America, partially offset by lower revenues from Europe and the
Rest of the World. Its adjusted EBITDA increased 7.1% y/y to USD 241mn; however, the margin declined to 20.8% from
21.8% in the prior year due to higher employee benefits (21.8% y/y) and cost of sales (7.3% y/y).
The bond has a Change of Control put clause, wherein
investors can redeem the bond at 101 if 1) UPL transfers
substantially all its assets to any entity other than permitted
holders, 2) UPL ceases to be a subsidiary of UPL Ltd, 3)
any entity other than permitted holder acquires more than
35% of UPL Ltd, and 4) permitted holders cease to own
20% of UPL Ltd and there is a rating downgrade.
UPL is the holding company for all the international operations of its parent, UPL Ltd. As of 31 March 2021, UPL Ltd had a
78% stake in UPL. Based in India, UPL Ltd is a leading crop protection products company and the fifth-largest
agrochemicals company in terms of revenue with market access to 90% of the world’s food basket. It offers an integrated
portfolio of both patented and post-patented agriculture solutions for various arable and specialty crops, including
biological, crop protection, seed treatment and post-harvest solutions, covering the entire crop value chain. UPL Ltd has
1,421 patents and 13,932 products registered and in over 138 countries.
We first initiated the trade on this bond on 30 July 2020. Our latest
recommendation was a BUY on 30 March 2021. Our view is based
on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Capital Structure Senior Unsecured
Maturity 16-Jun-1930
Coupon 4.625%
Source: Bloomberg, Standard Chartered
Key bond metrics
Currency USD
ISIN XS2189565992
Rating (S&P) BBB-
Issue Size 500mn
PUBLIC#
Total Debt/EBITDA 7.0x
Source: Company filings, Standard Chartered
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Total Debt/Total Assets 52.1%
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 19 October 2021 at 1:08 pm SST
In our assessment, San Miguel Corporation 5.5% perpetual
c.2025 (USD)(ISIN: XS2207320701, Price: 103.000, YTW:
4.62%) bond offers attractive yield from a large diversified
conglomerate in South East Asia. It also stacks up
favourably when compared with senior perpetuals issued by
other Philippine conglomerates, such as Jollibee 3.9%
perpetual c.2025 (YTW: 3.76%) and Royal Capital BV
(International Containers Terminal) 5% perpetual c.2026
(YTW: 3.69%) after adjusting for difference in industry
concentration and a lower market cap.
In addition, we like San Miguel 5.5% perpetual for its bond
holder-friendly structure given its senior unsecured status
and high coupon step-up, which leads us to assign a high
probability of call at the first call date.
Sustainalytics ESG risk rating
San Miguel Corporation 60.5Medium
Risk
Low and negligible risk-rated companies constitute part of Standard
Chartered Bank’s Sustainable Investments universe, which is a
subset of the CIO office’s equity core universe
Key-man risk in the form of Chairman and majority
shareholder Ramon Ang
Slower pace of vaccination in the Philippines could lead
to resurgence in cases and delay in economic recovery
Net Income, Adj (LTM) 566
Total Assets 39,971
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
29 October 2021, 12:10 PM SST
Fixed Income Trade NoteSan Miguel Corporation Summary of bond recommendations
We favour San Miguel Corporation (SMC) for being one of
the largest diversified conglomerates in the Philippines and
the South East Asia. We derive comfort from its robust
operating track record and market leading exposure to
multiple key industries in the Philippines, such as food and
beverage, power generation and fuel refinery.
San Miguel 5.5% perpetual c.2025 (USD) BUY
Rationale: Attractive yield, relative value
San Miguel Corporation –Consolidated financial
information
In USD million equivalent, unless stated. As of Q2 FY 2021
(30 June 2021).Despite surging leverage (total debt/EBITDA) in recent
years, we remain confident in SMC for its capability in
generating stable profits and free cash flow. Moreover, the
rally in oil prices have improved its earnings from COVID
pandemic.
Net Revenue, Adj (LTM) 16,174
EBITDA, Adj (LTM) 3,006
Senior Investment Strategist
Regulatory and operational risk as the group operates in
multiple industries and continues to expand into new areas,
especially infrastructure
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Total Equity 14,368
Total Debt 20,825
Cash and Cash Equivalents 7,105
EBITDA/Interest 2.9x
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
San Miguel 5.5% perpetual c.2025 (USD)
The perpetual is ranked senior unsecured and is callable on
29 July 2025. If the perpetual is not called in 2025, the
coupon would step up by 500bps and would be reset at the
prevailing 5Y US Treasury rate + 10.237%. Coupon
payments are deferrable and cumulative.
The perpetual has a change of control put clause at 101.
However, if the perpetual is not called by the issuer, the
coupon would step up by 500bps. Change of control is
defined as when Top Frontier Investment holding together
with Privado holdings ceases to own at least 35% of the
voting power of San Miguel.
Established in 1890 as a single brewery in Philippines, San Miguel has grown into one of the Philippines’ largest and most
diversified conglomerates. San Miguel is one of the Philippines largest employers and its revenues accounted for around
4% of the country’sGDP in 2020. As of 18 October 2021, the group had a market capitalisation of USD 5.5bn (PHP
277.8bn) and its largest shareholders were Top Frontier Investment Holdings and Privado Holdings with a stake of 66.1%
and 15.7%, respectively. San Miguel has diversified into five key business groups: Food and Beverage, Packaging, Fuel
and Oil, Energy and Infrastructure. Some key brands under San Miguel include San Miguel Foods, San Miguel
Infrastructure, San Miguel Global Power and Petron Corp. to name a few.
San Miguel’s revenue increased 57.7% y/y to USD 4,337mn in Q2 FY21 as all segments recorded significant improvement
in earnings. It derived majority of its revenue from Fuel and Oil (44.3%), Food and Beverage (34.9%) and Power
Generation (15.8%), followed by Packaging (2.9%) and Infrastructure 2.1%). Consequently, its Adjusted EBITDA improved
to USD 713mn from USD 165mn in Q2 FY20, and its margin increased to 16.4% from 6.0%.
USD
ISIN XS2207320701
Rating (S&P) NR
Issue Size
Coupon Type Deferrable, cumulative
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 30 July 2021. Our view
is based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Wealth Management Chief Investment Office | 29 October 2021, 12:10 PM SST
Capital Structure Senior Unsecured
Maturity Perpetual
Call Date 29-Jul-2025
Coupon 5.50%
Coupon Reset 5Y UST + 10.237%
Key bond metrics
Currency
500mn
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Total Equity* 11,179
Total Debt/EBITDA* 10.2x
EBITDA/Interest Expense 1.5x
Total Debt/Total Assets* 85.0%
Wealth Management Chief Investment Office
27 August 2021, 5:15 PM SST
Fixed Income Trade NotePower Finance Corp Summary of bond recommendations
Consolidated financial information
In USD million equivalent, unless stated. As of Q1 FY 2021
(30 June 2021). LTM = Last 12 months
Net Revenue, Adj (LTM) 3,836
Operating Income, Adj (LTM) 2,821
Net Income, Adj (LTM) 1,702
Total Assets* 106,027
Total Debt* 90,168
Senior Investment
Strategist
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
COVID-19 risks: A slowdown in economic growth could
negatively impact earnings and asset quality
A dilution of the Indian government’s shareholding
could indicate a lower linkage with the governmentSustainalytics ESG risk rating
Concentration risk with exposure limited to the domestic
power sector
Power Finance Corp 24.8Medium
Risk
In our assessment, Power Finance Corp. 4.5% 2029
(USD) (ISIN: XS2013531061, Price: 107.321, YTM: 3.42%)
offers an attractive yield for a USD-denominated senior
unsecured bond. It stacks up favourably against other
governmentowned peers, such as ONGC 3.375% 2029
(YTM: 3.06%) and NTPC 4.5% 2028 (YTM: 2.88%), after
adjusting for differences in sector exposure and maturities.
It also offers a 58bps carry over Power Finance Corp.
3.75% 2027 (YTM: 2.84%) for roughly 1.5 years longer
maturity.
Downgrade risk to High Yield (HY) with ratings on a
negative outlook
We derive comfort from its long operating track record of
over 30 years, robust loan portfolio and stable capital
adequacy ratio (see About the issuer section). Moreover,
PFC plays a strategic role in the government’s power sector
initiatives and has material exposure to state-owned power
utilities. As of Q1 FY22 (ending 30 June 2021), c.84% of
the loan portfolio value was comprised of state contracts.
We also derive comfort from PFC’s strong ownership
profile. We are optimistic with the potential support received
from the government, owing to its ownership profile and
importance to the domestic power sector.
Basis: Relative value, attractive yield
Source: Bloomberg, Company reports, Standard Chartered *As
of FY21 (31 March 2021)
We favour Power Finance Corp (PFC) for its leading market
position in the Indian power financing sector and
classification as a domestic systemically important non-
deposit taking nonbanking financial company (NBFC).
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 27 August 2021 at 4:56pm SST
Power Finance Corp. 4.5% 2029 (USD)
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Power Finance Corp. 4.5% 2029 (USD)
Capital Structure Senior Unsecured
Maturity 18-Jun-2029
Wealth Management Chief Investment Office | 27 August 2021, 5:15 PM SST
Key bond metrics
Currency USD
Coupon 4.5%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 17 January 2020. Our
latest recommendation was a BUY on 24 February 2021. Our view
is based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PFC’s adjusted net revenue increased 25.2% y/y to USD 951.4mn in Q1 FY22, primarily due to a 23.2% y/y increase in its
net interest income. Consequently, its adjusted operating income improved to USD 752.7mn from USD 606.7mn in the
prior year. As of Q1 FY22, PFC’s loan book stood at INR 3.7trn (up 4.6% y/y) and comprised of conventional power
generation (51%), transmission and distribution (38%), renewable power generation (10%) and others (1%). In addition, its
net non-performing asset ratio improved to 1.80% (from 3.15% in Q1 FY21) and capital adequacy ratio stood at 21.16%,
well above the regulatory requirement of 15.0%.
The bond has a change of control put clause, which allows
investors to redeem the bond at par if the Indian
government ceases to own over 50% of the voting rights or
issued share capital of the issuer.
ISIN XS2013531061
Rating (S&P) NR
Issue Size 600mn
Established in 1986, PFC is the largest NBFC in India providing financial assistance to the power sector. The company
provides financing to flagship government projects and fuel suppliers, equipment manufacturers and businesses in the
conventional and renewable energy sector. It has also set up several other business units, including power exchanges to
improve its business diversity. PFC is 55.99% owned by the Government of India and has a market capitalisation of USD
4.6bn (INR 342.8bn) as of 18 August 2021.
PUBLIC#
Wealth Management Chief Investment Office
9 September 2021, 4:15 PM SST
Consolidated financial information
Revenue, Adj (LTM) 30,920
Operating Income, Adj (LTM) 1,754
Net Income, Adj (LTM) 457
Total Assets 319,038
Total Equity 7,032
Total Investments 279,051
SCR Ratio 198.0%
Return on Equity 118.7%
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
M&G plc 6.5% 2048 c.2028 (USD)
Basis: Leading UK asset manager, relative value, attractive
yield
We like M&G plc (M&G) as it is one of Europe’s largest
asset managers with a strong asset portfolio and solid track
record of profitable operations. M&G is UK-based and has a
well-diversified geographic presence in 23 locations. It
helps minimise concentration risk, such as Brexit-related
impacts.
Furthermore, it has a broad range of income sources due to
its diverse mix of retail and institutional clients. We derive
comfort from M&G’s business execution and investment
expertise from its track record of relatively higher returns on
its managed funds, compared with its peers.
In addition, M&G has strong capitalisation with solvency
ratio of 198% for H1 21 (ending 30 June 2021), a surplus to
the regulatory requirement. We also view M&G’s recent
acquisition of Sandringham Financial Partners under its
wealth arm further expanding the company’s UK wealth
management business.
In USD million equivalent, unless stated. As of H1 2021 (30
June 2021). LTM = Last 12 months
Source: Bloomberg, Company reports, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 9 September 2021 at 3:18pm SST
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Senior Investment
Strategist
In our assessment, M&G plc 6.5% 2048 c.2028 (USD)
(ISIN: XS1888930150, Price: 122.966, YTW: 2.90%) offers
attractive relative value versus AXA SA 5.125% 2047
c.2027 (YTW: 2.15%) and Aegon N.V. 5.5% 2048 c.2028
(YTW: 2.56%) after adjusting for differences in credit
fundamentals, ratings and call dates.
Prolonged impact of the COVID-19 pandemic could
deteriorate the company's earnings and fund flows.
Geographical risk stemming from Brexit-related events.
Risk of non-call could lead the investors holding the bond
for an extended period of time.
Longevity risk as changing trends in longevity and
emerging medical trends have a material impact on
profitability and solvency.
Summary of bond recommendations
Fixed Income Trade NoteM&G plc
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Sustainalytics ESG risk rating
M&G plc 22.3Medium
Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
M&G plc 6.5% 2048 c.2028 (USD)
Coupon Reset
ISIN
Rating (S&P)
Issue Size
Capital Structure
Maturity
500mn
Subordinated
20-Oct-1948
20-Oct-2028
Source: Bloomberg, Standard Chartered
Next Call Date
USD
XS1888930150
BBB
Wealth Management Chief Investment Office | 9 September 2021, 4:15 PM SST
M&G is a leading multinational savings and investment company headquartered in London, serving around 5.3mn retail
and 800 institutional clients in 28 markets as of 31 December 2020. M&G operates through two key segments, (i) savings
and asset management (GBP 238.0bn AUM as of H1 21), which provides a range of retirement, savings and investment
management solutions; (ii) heritage (GBP 130.1bn AUM), which provides pensions, annuities, life, savings and investment
products. However, its heritage business is closed for new customers but may accept contributions from existing
policyholders.
Key bond metrics
Currency
In April 2021, Mike Evans stepped down as chairman of M&G plc after 2.5 years of service. M&G is on the search for a new
chair, while Fiona Clutterbuck (Senior Independent director) continues to act as the interim chair.
Total revenue during H1 21 surged by 588.2% y/y to USD 12.8bn owing to higher investment returns. It reported operating
income of USD 381.9mn (-64.5% y/y), while the margin deteriorated from 57.9% in H1 20 to 3.0% in H1 21, primarily due to
higher benefits and claims (+396.7% y/y) paid during the period. Furthermore, the solvency coverage ratio improved to
198% vs 164% in H1 20.
If capital requirements are not met, the Tier 2 bond cannot
be written down. Coupons can be deferred at the issuer’s
discretion, but it is cumulative. The coupon will reset to the
prevailing 5Y USD Treasury yield + 4.414% (initial spread +
1.00%), if the bond is not called on the first date.
Coupon
Coupon Type
6.50%
5Y UST + 4.414%
Deferrable, cumulative, non-
compounding
We first initiated the trade on this bond on 12 October 2018. Our
latest recommendation was a BUY on 25 March 2021. Our view is
based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
The M&G Wealth arm acquired Sandringham Financial Partners, an independent financial advisor in August 2021, bringing
in more than GBP 2.5bn assets under advice and relationships with around 180 advising Partners acting on behalf of over
10,000 individual clients.
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Product concentration in Methanol makes Methanex’s
financial performance susceptible to high volatility
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Wealth Management Chief Investment Office
9 September 2021, 4:03 PM SST
Consolidated financial information
Intense competition within the industry and from
substitutes
Government regulations and environmental-related
policies stemming from cross-country presence and
industry nature
EBITDA/Interest Expense
Net Debt/Equity
EBITDA, Adj (LTM) 641
Net Income, Adj (LTM) 97
Cash and Cash Equivalents 764
Total Assets 5,790
Total Debt
Senior Investment
Strategist
We like Methanex Corporation (Methanex), the largest
methanol producer in the world, for its industry leadership
and globally diversified supply chain.
The rebound in methanol prices with the global economic
recovery has strengthened Methanex’s financial
performance, deleveraging initiatives and cashflows, which
improved credit metrics. This led to a change in rating
outlook from negative to stable by S&P and Moody’s in
2021.
In our view, demand for methanol should continue to grow
steadily due to increased use of methanol in energy-related
applications due to its environmental and economic benefits
as a fuel. Therefore, we are optimistic with Methanex’s
decision to restart its Geismar 3 project with an aim to meet
surging global methanol demand.Total Debt/EBITDA
In USD million equivalent, unless stated. As of Q2 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 3,476
Source: Bloomberg, Company reports, Standard Chartered
2,884
Fixed Income Trade Note
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Methanex Corporation Summary of bond recommendations
124.0%
Volatility in energy prices as nearly half of the methanol
demand is from energy-related applicationsSustainalytics ESG risk rating
Methanex Corporation 25.5Medium
Risk
Total Equity 1m709%
4.5x
6.3x
We also derive comfort from Methanex’s strong liquidity
profile. As of Q2 FY21, company has USD764mn in cash,
USD600mn undrawn construction facility and access to an
additional USD300mn under an undrawn revolving credit
facility with no debt maturities until the end of 2024.
In our assessment, Methanex Corporation 5.25% 2029
(USD) (ISIN: US59151KAL26, Price: 110.225, YTM: 3.80%)
offers an attractive yield for a BB-rated senior unsecured
bond, relative to a chemical/plastic product manufacturer
Westlake Chemical Corp 4.375% 2047 (YTM: 3.40%), after
adjusting for differences in maturity and ratings.
Methanex Corporation 5.25% 2029 (USD)
Basis: Relative value, attractive yield
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 9 September 2021 at 3:22pm SST
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Methanex Corporation 5.25% 2029 (USD)
Methanex’s adjusted revenue grew 108.5% y/y to USD1,068mn in Q2 FY21 on strong methanol demand and an increase in
methanol prices. Its adjusted EBITDA grew by 798.4% y/y to USD252mn in Q2 FY21, supported by higher revenue and
lower costs. The board of directors approved an increase in quarterly dividend to USD0.125 per share from USD0.0375 per
share, payable from September 2021.
Headquartered in Vancouver, Canada, Methanex is the world’s largest producer and supplier of methanol with around 13%
global market share in 2020. With strategically located manufacturing sites in Canada, Chile, Egypt, New Zealand, Trinidad
and Tobago and the US, it had over 9.2mn tonnes of total annual capacity in 2020, which is expected to increase over time.
Methanol is in demand across the world as it is used in both traditional chemical applications and energy-related
applications. China was Methanex’s largest customer destination by revenue in 2020 (31%), followed by Europe (18%) and
the US (16%).
Wealth Management Chief Investment Office | 9 September 2021, 4:03 PM SST
Maturity 15-Dec-2029
Next Call Date 15-Sep-2029
Coupon 5.25%
Currency USD
ISIN US59151KAL26
Rating (S&P) BB
Issue Size 700mn
Capital Structure Senior Unsecured
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 15 November 2019. Our
latest recommendation was a BUY on 9 February 2021. Our view
is based on a 12-month investment horizon
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
The bond has a change of control clause, requiring
Methanex to make an offer to redeem the bond at 101, plus
any accrued and unpaid interest if it ceases to own more
than 50% of the outstanding voting stock along with a rating
decline.
Key bond metrics
PUBLIC#
Key risks
Sustainalytics ESG risk rating
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Nordstrom Inc. 14.0 Low Risk
Manpreet Gill Abhilash Narayan
Head Senior Investment Strategist
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
We like Nordstrom due to its position as a leading fashion
and retail department store operator in the US. Although
traditional retail operators have been challenged by online
sales channels over the last few years, Nordstrom has
remained largely resilient to changing industry trends with
the company rapidly adopting to digital sales and
distribution.
Although Nordstrom’s operating performance has been
improving post-pandemic, its recovery has lagged its peers.
However, we derive comfort from its strong liquidity, well
distributed debt maturity profile, cost-cutting measures and
tighter collaboration with brand partners.
Further, Nordstrom suspended dividends and halted share
buybacks in 2020 in response to COVID-19 related
pressures. We also favour its deleveraging measures and
believe the company is on track to reduce its leverage ratio
to approximately 3.0x by year-end.
In our assessment, Nordstrom Inc. 4.735% 2030 (USD)
(ISIN: US655664AT70, Price: 102.724, YTM: 4.00%) stacks
up as favourable against Kohl’s Corporation 4.25% 2025
(YTM: 1.59%) and other HY retail bonds such as Bath &
Body Works Inc. 5.25% 2028 (YTM: 3.12%) after adjusting
for differences in maturity and ratings.
Adverse impact on margins due to off-price product mix
and inventory constraints
Growing challenges from e-commerce could pressure
growth, margins and profitability
Total Debt/EBITDA 3.3x
Net Debt/Equity 1574.3%
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
14 September 2021, 5:50 PM SST
Fixed Income Trade NoteSummary of bond recommendations
Consolidated financial information
In USD million equivalent, unless stated. As of Q2 FY 2022
(30 January 2021).
Revenue, Adj 13,400
EBITDA, Adj 1,446
268
Total Assets
Basis: Relative value, attractive yield
4,706
9,230
Total Equity
Nordstrom Inc 4.375% 04/2030 (USD)
Net Income, Adj 66
Cash and Cash Equivalents 487
Total Debt
Nordstrom Inc
Total Debt/Total Assets 51.0%
Source: Bloomberg, Standard Chartered
A resurgence of the pandemic could affect business
operations and sales.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 13 September 2021 at 5:37pm SST
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Nordstrom Inc 4.375% 2030 (USD)
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Founded in 1901 as a retail shoe business in Seattle, Washington, Nordstrom is a leading retail department store in the
US. It offers an extensive selection of high-quality brand and private label merchandise focused on apparel, shoes,
cosmetics, accessories and home goods. The company’s two operating segments, Nordstrom and Nordstrom Rack,
accounted for 66% and 34% of net sales in H1 FY21. In July 2021, Nordstrom acquired minority interest in in the Topshop,
Topman, Miss Selfridge and HIIT brands jointly with online retailer ASOS.
Revenue improved by 96.4% y/y in Q2 FY21, reflecting the recovery from the impact of COVID-19 with the removal of
restrictions in 2021. EBITDA grew to USD 225mn from a loss of USD 120mn in the prior year, primarily due to higher sales
volume and improved merchandise margins. In July 2021, Nordstrom retired USD 500mn unsecured 4.0% notes due in
October 2021 using cash on hand.
Currency USD
Maturity 1-Apr-2030
Wealth Management Chief Investment Office | 14 September 2021, 5:50 PM SST
Key bond metrics
We first initiated the trade on this bond on 11 December 2020. Our
latest recommendation was a BUY on 18 March 2021. Our view is
based on a 12-month investment horizon.
The bond has a change of control call clause, which allows
the issuer to redeem the bond at 101 if (i) more than 50% of
the voting power is transferred and (ii) it is downgraded to
below Investment Grade (IG) within 60 days after a change
of control.
Call Date 1-Jan-2030
Coupon 4.375%
Source: Bloomberg, Standard Chartered
ISIN US655664AT70
Rating (S&P) BB+
Issue Size 500mn
Capital Structure Senior Unsecured
PUBLIC#
Investment case
Shimao Group 4.6% 2030 c.2025 (USD)
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
17 September 2021, 2:58 PM SST
Summary of bond recommendations
Consolidated financial information
Rationale: Relative value, attractive yield
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 217 September 2021 at 10:00 am & 12:30
pm SST
We like Shimao Group Holdings Ltd (Shimao) for its market
leadership and strategic exposure to Tier-1 and Tier-2 ties
in China with attributable land bank of roughly 44mn m2 as
of 1H FY21 (ending 30 June 2021).
We derive comfort from its execution track record over the
past few years. Shimao has recorded consistent increase in
contract sales while maintaining stable gross profit margin.
We also derive comfort from its prudent financial
management, which includes a strong balance sheet that
satisfied all the 3 red lines policy and low net gearing ratio.
Thus, we add Shimao Group Holdings 5.2% 2027 c.2024
[Green] (USD) (ISIN: XS2385392936, Price: 98.375, YTW:
5.56%) as we like the attractive yield offered by the bond.
We believe the bond offers attractive relative value when
compared to bonds such as Country Garden 5.125% 2027
c.2024 (USD) (YTW: 4.30%) and Sino-Ocean 4.75% 2029
(USD) (YTC: 4.94%) after adjusting for difference in ratings
and maturity date.
In addition, we retain Shimao Group Holdings 4.6% 2030
c.2025 (USD) (ISIN: XS2198427085, Price: 96, YTW:
5.17%) as we continue to find its yield on offer attractive.
The bond also offer relative value when compared to
Country Garden 4.8% 2030 c.2025 (USD) (YTW: 4.58%).
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
Rationale: Attractive yield, relative value
Total Debt/EBITDA 5.3x
EBITDA/Interest Expense 17.7x
Net Debt/Equity 55.2%
Source: Bloomberg, Standard Chartered
In USD million equivalent, unless stated. As of H1 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 21,786
EBITDA, Adj (LTM) 4,410
Net Income, Adj (LTM) 1,776
Total Assets 97,034
Fixed Income Trade NoteShimao Group Holdings
Shimao Group 5.2% 2030 c.2025 (USD)
Total Debt 25,233
Total Equity 25,490
Joint venture projects would limit transparency.
Regulatory risks might restrict the company’s business
operation and capital utilization.
Sustainalytics ESG risk rating
Shimao Group Holdings 24.7Medium
Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Senior Investment
Strategist
A broad slowdown in China could negatively impact
property demand and the company’s profitability.
Escalating default risk could negatively impact industry
outlook
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structures
Shimao Group 4.6% 2030 c.2025 (USD)
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 24 July 2020. Our latest
recommendation was a BUY on 30 July 2021. Our view is based
on a 12-month investment horizon.
Shimao Group Holdings 5.2% 2027 c.2024 [Green]
(USD)
The bond has a Change of Control clause where the
company is required to make an offer to repurchase the
bond at 101 if for example, Mr. Hui Wing Mau and affiliates
own less than 35% of Shimao’s voting stock AND there is a
rating decline.
Key bond metrics
Currency USD
ISIN XS2198427085
Rating (S&P) NR
Issue Size 300mn
XS2385392936
Shimao is a Shanghai-based leading integrated property developer focusing on developing residential, hotel, office and
commercial properties with a strong presence in Tier-1 and Tier-2 cities. As of 30 June 2021, it operated 424 projects
across 110 cities and had a land bank of 73mn sq. m. The group’s Chairman Hui Wing Mau owns approximately 65.0%
stake in the company.
Key bond metrics
Currency USD
ISIN
The group’s revenue increased 18% y/y to CNY 73bn during 1H FY21 (ending 30 June 2021). Contracted sales increased
by 38% y/y to CNY 153bn. It completed an aggregate contracted Gross Floor Area (GFA) of 8.6mn m2 during the period
with average selling price at CNY 17,700, which is among top-tier among Chinese property developers.
Wealth Management Chief Investment Office | 17 September 2021, 2:58 PM SST
Source: Bloomberg, Standard Chartered
Our view is based on a 12-month investment horizon. We have not
recommended this bond previously.
The bond has a Change of Control clause where the
company is required to make an offer to repurchase the
bond at 101 if for example, Mr. Hui Wing Mau and affiliates
own less than 35% of Shimao’s voting stock AND there is a
rating decline.
Coupon 5.2%
Rating (S&P) NR
Issue Size 748mn
Capital Structure Senior Unsecured
Maturity 16-Jan-2027
Call Date 16-Sep-2024
Coupon 4.6%
Senior Unsecured
Maturity 13-Jul-2030
Call Date 13-Jul-2025
Capital Structure
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Basis: Dominant gaming operator in Malaysia, attractive
yield, relative value
We like Genting Malaysia for its dominant market position
in Malaysia being the sole licensed casino operator in the
country. We also favour its globally diversified casino and
resort footprint with over 40 properties across Asia, Europe,
and the Americas.
Although Genting Malaysia was recently downgraded by
one international rating agent due to delay in recovery
prospect from surging Delta variant, we derive some
comfort from its strong liquidity profile and balance sheet.
We believe its new outdoor theme park, Genting
SkyWorlds, scheduled to open in Q3 FY21, would help
generate incremental revenue in the medium term. We also
believe the prospect lifting of travel restrictions will further
strengthen earnings.
We continue to believe that GENM Capital Labuan
Limited 3.882% 2031 (USD) (ISIN: USY2700RAA06, Price:
99.734, YTM: 3.79%) offers an attractive relative value for a
senior unsecured bond rated Investment Grade (IG) from a
large casino and resort operator and stacks up as attractive
when compared to Sands China 4.375% 2030 (YTM: 3.72
%), adjusting for differences in geography and maturity. The
bond also stacks up as attractive versus other related
Genting bonds, such as GOHL Capital Limited 4.25% 2027
(YTM: 3.14%), after adjusting for differences in structure
and maturity.
The COVID-19 pandemic in Malaysia could lead to
prolonged restrictions and slower recovery in consumer
demand
Concentration risk as the majority of Genting Malaysia’s
total revenue is derived from Malaysia
Genting Malaysia Berhad 26.4Medium
Risk
Senior Investment
StrategistLow and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Total Debt/EBITDA 0.7x
EBITDA/Interest Expense 45.5%
Net Debt/Equity 66.2%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced
from Bloomberg on 24 September 2021 at 2:14 pm SST
21 September 2021, 1:00 PM SST
Fixed Income Trade NoteGenting Malaysia Berhad Summary of bond recommendations
GENM Capital Labuan Limited 3.882% 2031
(USD)
Genting Malaysia Berhad – Consolidated financial
information
In USD million equivalent, unless stated. As of Q2 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 945
EBITDA, Adj (LTM) 63
Net Income, Adj (LTM) -376
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
Total Assets 7,372
Total Debt 3,351
Total Equity 3,246
Sustainalytics ESG risk rating
Loss of license exclusivity could affect domestic
operations and revenues
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Genting’s overseas operations include Resorts World Casino in New York and Resorts World Catskills, one of four
commercial gaming licensed casinos in New York. Genting Casinios United Kingdom is one of the largest gaming
operators in the UK. Genting newest theme park, Genting SkyWorlds Theme Park, is set to open in Malaysia this year
following delays due to the COVID-19 pandemic.
The company’s adjusted revenue grew 6.4x y/y to USD 198.1mn in Q2 FY21 as the comparative period in FY20 was
adversely affected due to the temporary closure of resort operations worldwide due to the pandemic. Adjusted EBITDA
grew to USD 13.2mn in Q2 FY21 from a loss of USD 121.8mn the prior year, supported by the recovery from the effects of
the COVID-19 pandemic, especially in the UK and US markets.
The bond is issued by GENM Capital Labuan Limited, a
wholly owned subsidiary of Genting Malaysia, the guarantor
of the bond. Bondholders are subject to mandatory
disposition or redemption at the option of the issuer if i)
Genting Malaysia fails to apply for or maintain a license or
ii) is notified by a gaming authority that it will not be
licensed.
The bond also includes a change of control clause where
the issuer must offer to repurchase the notes at 101 if there
is i) a sale of substantially all of the assets of Genting
Malaysia or ii) a loss of outstanding voting stock in Genting
Malaysia to less than 50%: AND a loss of Investment grade.
Coupon 3.9%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 30 April 2021. Our view
is based on a 12-month investment horizon.
Currency USD
ISIN USY2700RAA06
Rating (S&P) BBB-
Issue Size 1bn
Wealth Management Chief Investment Office | 21 September 2021, 1:00 PM SST
GENM Capital Labuan Limited 3.882% 2031 (USD)
Key bond metrics
The bond is issued by GENM Capital Labuan Limited, a wholly owned subsidiary of Genting Malaysia, a globally diversified
casino and resort operator founded in 1980. Genting Group, the parent company, has a 49.5% ownership in Genting
Malaysia. Operations in Malaysia accounted for 69% of Genting Malaysia’s revenue, in H1 FY21, while 16% was from the
UK and Egypt with 15% originating from the US and Bahamas. The company has three main revenue segments: Leisure
and Hospitality (92% of H1 FY21 Revenue), Property (3%) and Investment and Others (5%).
Maturity 19-Apr-2031
Call Date 19-Jan-2031
Capital Structure Senior Unsecured
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Despite, the fluctuation in revenue due to the timing of
projects, we remain confident in Shui On owing to its stable
rental income from investment properties and financial
discipline. Moreover, it stacks up favourably versus some
larger developers in China due to its voluntary deleveraging
efforts in the past, which has enabled it to satisfy the three
limits in the Three Red Lines policy introduced by regulators
in China in 2020.
Total Debt 5,462
Total Equity 7,420
Total Debt/EBITDA 6.5x
EBITDA/Interest Expense
Revenue could fluctuate as Shui On focusses on lumpy
large projects
Shui On Land Ltd 20.5Medium
Risk
Senior Investment
StrategistLow and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
In our view, Shui On Development (Holding) Ltd 5.75%
2023 c.2021 (USD) [Green bond] (ISIN: XS2075800743,
Price: 100.107, YTM: 5.69%) offers attractive yield and
relative value compared with Shui On 6.25% 2021 (YTM:
5.48%). It also stacks up favourably versus other
developers in China such as CIFI Holdings Group 5.5%
2023 c.2021 (YTM: 5.38%).
A broad slowdown in China could negatively impact
property demand and the company’s profitability
The impact of COVID-19 on the demand for prime
commercial real estate could reduce rental income and lead
to a decline in property values
Sustainalytics ESG risk rating
Wealth Management Chief Investment Office
24 September 2021, 3:50 PM SST
Fixed Income Trade NoteShui On Land Ltd Summary of bond recommendations
We favour Shui On Land Ltd (Shui On) for its proven track
record of developing and managing large-scale properties
primarily in Tier 1 and Tier 2 cities in China. We also like its
commercial and retail portfolio, positioning it as a leading
player in the commercial property space in Shanghai. Shui
On has also placed an emphasis on sustainability, with over
80% of its completed commercial projects having attained
green
certifications. We view the potential voluntary spin-off and
listing of its commercial investment property and property
and asset management businesses (see About the issuer
section) positively as it will improve the group’s
capitalisation.
Shui On Development (Holding) Ltd 5.75% 2023 c.2021
(USD)Basis: Short dated, relative value, attractive yield
Shui On Land Ltd – Consolidated financial information
In USD million equivalent, unless stated. As of H1 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 2,285
EBITDA, Adj (LTM) 823
Net Income, Adj (LTM) 531
Total Assets 16,989
8.2x
Net Debt/Equity 43.6%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced
from Bloomberg on 24 September 2021 at 3:25 pm SST
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Call Date 12-Nov-2021
Coupon 5.8%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 27 November 2020. Our
latest recommendation was a BUY on 25 March 2021. Our view is
based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
ISIN XS2075800743
Rating (S&P) NR
Issue Size 500mn
Capital Structure Senior Unsecured
Maturity 12-Nov-2023
Wealth Management Chief Investment Office | 24 September 2021, 3:50 PM SST
The issuer, Shui On Development (Holding) Ltd, is a wholly owned subsidiary of Shui On. Incorporated in 2004 and
headquartered in Shanghai, Shui On is a mid-sized property developer and the flagship property company of Shui On
Group. The company is primarily engaged in the development, sale, leasing, management and long-term ownership of
large-scale commercial and residential mixed-use properties in prime city locations across five key Tier 1 and Tier 2 cities:
Shanghai, Wuhan, Foshan, Chongqing and Nanjing. As of 30 June 2021, Shui On was 55.68% owned by Shui On Group
and Vincent H S Lo.
On 4 August 2021, Shui On announced the potential spin-off and separate listing of its commercial investment property and
property and asset management businesses, which will be operated by Shui On Xintiandi by way of listing of its shares on
the Hong Kong Stock Exchange. After the issuance, the company will continue to remain a controlled subsidiary of Shui
On. In our view, the spin-off will improve the group’s capitalisation and help the business grow through focused strategies
and efficient deployment of management resources.
Shui On’s revenue grew in H1 FY21 to USD 1.9bn, owing to a significant increase in property sales versus the prior year
period, which did not have any property sales due to timing issues related to the completion of projects. Its adjusted
EBITDA increased to USD 680mn from USD 70mn in the prior year, while the EBITDA margin improved to 36.7% from
33.9%. Moreover, Shui On recommenced its dividend payments during the period, declaring a dividend of HKD 0.036 per
share, which it had stopped in FY20 due to the uncertainties arising from the COVID-19 pandemic. As of 30 June 2021,
Shui On had a total landbank of 8.4mn sq m.
Shui On Development (Holding) Ltd 5.75% 2023
c.2021 (USD) [Green]
The bond is guaranteed by the parent, Shui On. In addition,
it has a change of control clause, whereby the bond can be
called at 101 if Chairman Vincent Lo or any affiliates are the
beneficial owners of less than 35.0% of the total voting
power of Shui On.
Key bond metrics
Currency USD
PUBLIC#
Key risks
Sustainalytics ESG risk rating
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan Fosun International 41.9 Severe Risk
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist
Source: Sustainalytics
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Source: Bloomberg, Standard Chartered
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
29 September 2021, 5:50 PM SST
Fixed Income Trade NoteFosun International
37,603
Total Equity 29,886
Total Debt/EBITDA
Fortune Star 6.85% 2024 c.2023 (USD)
Basis: Relative value, attractive yield
Fortune Star 5.95% 2025 c.2023 (USD)
Basis: Relative value, attractive yield
8.5x
Risk of deterioration in leverage due to aggressive
debtfunded acquisitions
Key man risk given the earlier disappearance of the
chairman Guo Guangchang in 2015
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 29 September 2021 at 4:41 pm SST
EBITDA/Interest Expense 2.4x
Net Debt/Equity 34.4%
Summary of views
Fosun International - Consolidated financial
information
In USD million equivalent, unless stated. As of H1 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 21,730
EBITDA, Adj (LTM) 2,041
Net Income, Adj (LTM) -1,535
Total Assets 120,618
Total DebtIn our assessment, Fortune Star 6.85% 2024 c.2023
(USD) (ISIN: XS2132420758, Price: 104.071, YTW: 5.24%)
offers an attractive yield for a USD-denominated bond and
stacks up as favourable versus China Oil & Gas 5.5% 2023
c.2021 (YTW: 3.84%) and Golden Eagle Retail Group
4.625% 2023 (YTM: 3.63%).
We retain Fortune Star 5.95% 2025 c.2023 (USD) (ISIN:
XS2238561794, Price: 101.997, YTW: 5.39%) as it offers
an attractive yield and stacks up as favourable versus
China Oil & Gas 4.7% 2026 c.2024 (YTM: 4.22%) after
adjusting for differences in call dates and rankings.
COVID-19 resurgence could impact its core businesses
Senior Investment
Strategist
We like Fosun International (Fosun) for its solid investment
track record and large diversified portfolio, spanning across
industries and geographies. Although leverage has been
elevated due to its debt funded investment strategy, we
derive comfort from its successful track record of
investments returns. We also derive comfort from its
relatively stable operating performance and earnings
growth despite volatile markets. We also see positive
development from recent rating outlook revision to stable
from negative, largely due to its stablising capital structure
and manageable liquidity. In our view, the global rollout of
vaccines and lifting of travel restrictions should also boost
its tourism-related revenue.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structures
Fortune Star 6.85% 2024 c.2023 (USD) Fortune Star 5.95% 2025 c.2023 (USD)
Key bond metrics
Currency USD
ISIN XS2132420758
Rating (S&P) BB
Issue Size 600mn
Wealth Management Chief Investment Office | 29 September 2021, 5:50 PM SST
Currency USD
ISIN XS2238561794
Rating (S&P) BB
Senior Unsecured
Maturity 19-Oct-2025
Call Date 19-Oct-2023
Coupon 5.95%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 15 January 2021. Our
view is based on a 12-month investment horizon.
Capital Structure
Key bond metrics
The bond is issued by Fortune Star (BVI) Limited, an
indirect wholly owned subsidiary of Fosun, which is the
guarantor of the bond. The issuer can redeem the bond at
101% if (i) Fosun engages in the sale of all or substantially
all its assets, or (ii) Guo Guangchang and Wang Qunbin
own less than 40% in Fosun International; and the bond is
downgraded.
The bond is issued by Fortune Star (BVI) Limited, an
indirect wholly owned subsidiary of Fosun, which is the
guarantor of the bond. The issuer can redeem the bond at
101% if (i) Fosun engages in the sale of all or substantially
all its assets, or (ii) Guo Guangchang and Wang Qunbin
own less than 40% in Fosun International; and the bond is
downgraded.
Capital Structure Senior Unsecured
Maturity 2-Jul-2024
Call Date 2-Jul-2023
Coupon 6.85%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 15 January 2021. Our
view is based on a 12-month investment horizon.
Issue Size 700mn
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
In H1 FY21 (ending 30 June 2021), Fosun’s adjusted revenue increased 21.1% y/y to USD 10.8bn with the launch of new
products in the Health segment, growth in the Jewelry and Fashion Business unit and strong investment returns from the
insurance sector. Adjusted EBITDA decreased 49.6% y/y to USD 875.7mn owing to higher expenses.
Established in 1992, Fosun is one of the leading private sector conglomerates in China, operating under four core
businesses: Happiness (40.1% of H1 FY21 revenue), Wealth (27.7%), Health (27.2%) and Intelligent Manufacturing
(5.0%). It spans across 20 countries and regions across 5 continents. As of FY20, Fosun is 71.7% owned by Fosun
Holdings for which the beneficial owner is Fosun International Holdings. Fosun International Holdings is 85.3% owned by
Guo Guangchang and 14.7% owned by Wang Qunbin. In H1 FY21, Fosun’s subsidiary, Fosun Pharma, announced its plan
to enter into a joint venture agreement with BioNTech to localise the mRNA COVID-19 vaccine.
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam Source: Sustainalytics
Senior Investment Strategist
We like Scentre Group Trust (Scentre) for its prominent one
as of the leading property groups with focus on retail
shopping centres in Australia and New Zealand. Despite
the ongoing COVID-19 pandemic, gross rent collection and
customer footfall increased in H1 FY21. We derive comfort
from its key investment portfolio comprising 42 Westfield
living centres, with strong franchise value, which offer a
diversified retail mix in Australia and New Zealand. We also
favour its resilient operations with an occupancy of 98.5%
despite lockdowns and 1,515 new leasing deals including
619 new merchant deals. Moreover, we expect the global
rollout of vaccines and relaxation of restrictions to provide
further tailwinds to rental collection in 2021. In July 2021,
S&P changed its outlook to stable from negative.
We believe, Scentre Group Trust 4.75% 2080 c.2026
(USD) (ISIN: USQ8053LAA28, Price: 106.604, YTW:
3.30%) offers attractive yield and relative value for an IG-
rated subordinated bond. It stacks up as attractive versus
other subordinated bonds, such as BP Plc 4.375%
perpetual c.2025 (YTW: 2.53%) and China Communication
Construction 3.65% perpetual c.2026 (YTW: 3.01%), after
adjusting for differences in business profile, ratings and call
dates.
We also believe Scentre Group Trust 5.125% 2080 c.2030
(USD) (ISIN: USQ8053LAB01, Price: 107.800, YTW:
4.08%) offers an attractive relative value compared with
other subordinated bonds, such as BP Plc 4.875%
perpetual c.2030 (YTW: 3.52%), after adjusting for
difference in business profile and ratings.
COVID-19 resurgence could impact rent collection
Economic downturn and rise in e-commerce could
impact portfolio occupancy and related business
performance
Senior Investment
Strategist
Sustainalytics ESG risk rating
Scentre Group Trust 7.9Negligent
Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Concentration risk as majority of Scentre’s revenue is
derived from Australia
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Net Debt/Equity 71.1%
Summary of views
Total Debt 11,060
Total Equity 14,267
Total Debt/EBITDA 9.8x
EBITDA/Interest Expense 3.1x
Scentre Group Trust 4.75% 2080 c.2026 (USD)
Rationale: Relative value, attractive yield
Scentre Group Trust 5.125% 2080 c.2030 (USD)
Rationale: Relative value, attractive yield
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
4 October 2021, 3:15 PM SST
Consolidated financial information
In USD million equivalent, unless stated. As of 1H FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 1,606
Operating Income, Adj (LTM) 1,121
Net Income, Adj (LTM) 1,070
Total Assets 27,474
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 4 October 2021 at 2:41pm SST
Fixed Income Trade NoteScentre Group Trust
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structures
Scentre Group Trust 4.75% 2080 c.2026 (USD) Scentre Group Trust 5.125% 2080 c.2030 (USD)
Scentre Group was formed in 2014 through the demerger of Westfield Group and the merger of its Australian and New
Zealand operating platform and management with Westfield Retail Trust. The company owns and operates the pre-eminent
living centre portfolio in Australia and New Zealand. Its retail real estate assets under management are valued at
USD50.1bn and shopping centre ownership interests are valued at USD34.3bn. It holds an exclusive, continuing and
royalty-free license to use the Westfield brand in Australia and New Zealand. As of September 2021, the group owns and
operates 42 Westfield living centres comprising over 12,000 outlets. The Group’s operational segments include property
investment (93% of H1 FY21 Revenue), property development and construction (5%) and property management (2%).
The company’s adjusted revenue increased 16% y/y to USD834mn in H1 FY21, reflecting the recovery from the COVID-19
pandemic despite a number of government lockdowns, with sales, excluding cinemas and travel, exceeding that of H1
FY19. Operating income increased 17% y/y as a result, while margins improved to 69.7% from 69.1% in H1 FY20.
ISIN USQ8053LAA28 ISIN USQ8053LAB01
Wealth Management Chief Investment Office | 4 October 2021, 3:15 PM SST
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Key bond metrics
Currency USD Currency USD
Call Date 24-Jun-2026 Call Date 24-Jun-2030
Coupon 4.75% Coupon 5.125%
Rating (S&P) BBB+ Rating (S&P) BBB+
Issue Size 1.5bn Issue Size 1.5bn
Capital Structure Subordinated Capital Structure Subordinated
We first initiated the trade on this bond on 15 January 2021. Our
view is based on a 12-month investment horizon.
We first initiated the trade on this bond on 15 January 2021. Our
view is based on a 12-month investment horizon.
Coupon Type
Source: Bloomberg, Standard Chartered Source: Bloomberg, Standard Chartered
Deferrable, cumulative
Coupon Reset 5Y UST + 4.685%
Coupon Type Deferrable, cumulative
The bond is subordinated and is callable in June 2026. If
not called, the coupon will be reset to the prevailing 5Y US
Treasury rate + 4.379% (initial spread). If the bond remains
not called in June 2030 and June 2046, the coupon will be
reset prevailing 5Y US Treasury rate + 4.629% and
prevailing 5Y US Treasury rate + 5.379%. According to
S&P, the bond will lose equity credit after the first call date.
Coupons are deferrable but cumulative and compounding.
The bond is subordinated and is callable in June 2030. If
not called, the coupon will reset to the prevailing 5Y US
Treasury yield + 4.685%. If the bond remains not called in
June 2046, the coupon will be reset at prevailing 5Y US
Treasury rate + 5.435%. According to S&P, the bond will
lose equity credit after the first call date. Coupons are
deferrable but cumulative and compounding.
Coupon Reset 5Y UST + 4.739%
Maturity 24-Sep-2080 Maturity 24-Sep-2080
Key bond metrics
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam Source: Sustainalytics
Senior Investment Strategist
Basis: Relative value, high-likelihood of call at first call date
Total Debt/Total Assets
We like Majid Al Futtaim Holding LLC (MAF) for its large-
scale and high-quality diversified real estate portfolio. We
derive comfort from its Investment Grade (IG) rating and
position as one of the highest-rated privately held
corporates in the Gulf Cooperation Council (GCC) region.
We also like its strong balance sheet and sufficient liquidity.
In addition, prudent policies have meant it has been able to
maintain its strong financial profile, with cash reserves
sufficient to cover 39 months of financing needs, as of H1
FY21. Moreover, with the ongoing roll-out of COVID-19
vaccinations, we expect MAF’s earnings and profitability to
pick up.
While there are no direct comparables, we continue to
believe MAF Global Securities 5.5% perpetual c.2022
(USD) (ISIN: XS1567903627, Price: 101.108, YTW: 4.25%)
offers an attractive yield and relative value from an IG-rated
junior subordinated bond. It stacks up as favourable versus
the DP World 3.908% 2023 (YTM: 1.43%) and ICD Funding
Ltd 4.625% 2024 (YTM: 2.06%) after adjusting for
differences in ranking, ratings and maturities. We also like
the bond due to its coupon step-up option and loss of equity
credit from S&P after the first call date, which we believe
incentivizes MAF to call the perpetual at the first call date.
Prolonged impact of the COVID-19 pandemic could
reduce economic activity and worsen the company’s
operating performance
Geographical concentration in Dubai might increase its
market risk
Risk of non-call could lead to investors holding the
perpetual for an extended period of time
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Senior Investment
Strategist
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Total Equity 7,445
Total Debt/EBITDA 4.2x
EBITDA/Interest Expense 13.4x
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 4 October 2021 at 2:41pm SST
Sustainalytics ESG risk rating
Majid Al Futtaim Holding LLC 19.6 Low Risk
32.6%
Source: Bloomberg, Standard Chartered
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
7 October 2021, 12:45 PM SST
Fixed Income Trade NoteMajid Al Futtaim Holding LLC Summary of views
MAF Global Securities 5.5% perpetual c.2022 (USD)
Majid Al Futtaim Holding LLC - Consolidated financial
information
In USD million equivalent, unless stated. As of 1H FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 8,413
EBITDA, Adj (LTM) 1,228
Net Income, Adj (LTM) 434
Cash and Cash Equivalents 518
Total Debt 5,114
Total Assets 15,702
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
In August 2021, MAF signed an agreement for an USD 1.5bn sustainability-linked, five-year revolving credit facility, which is
primarily based on ESG-related performance. In September 2021, MAF opened Oman’s fifth-largest shopping mall, Mall of
Oman, and 80% of gross leasable area was already leased.
In H1 FY21 (ending 30 June 2021), MAF’s adjusted revenue declined 9.7% y/y to USD 4.3bn, owing primarily to a 12.4%
dip in retail revenue due to business disruption and a challenging macroeconomic environment caused by the pandemic.
Adjusted EBITDA rose 0.3% y/y to USD 533.9mn, due to efficient cost management, resulting in an increase in the EBITDA
margin to 12.5% from 11.3% in H1 FY20. As of H1 FY21, MAF’s total debt to EBITDA improved to 4.2x from 4.5x in FY20.
MAF Global Securities 5.5% perpetual c.2022
(USD)
If the perpetual is not called at the first call date, the coupon
will reset to 5Y swap + 3.476%. The coupon will also step
up by 25bps in 2027 and 75bps in 2042.
We first initiated the trade on this bond on 13 March 2017. Our
latest recommendation was a BUY on 29 March 2021. Our view is
based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Coupon 5.50%
Coupon Reset 5Y swap + 3.476%
Coupon Type Deferrable, cumulative
Source: Bloomberg, Standard Chartered
Rating (S&P) BB+
Issue Size 500mn
Capital Structure Junior Subordinated
Maturity Perpetual
Call Date 7-Sep-2022
Wealth Management Chief Investment Office | 7 October 2021, 12:45 PM SST
The issuer, MAF Global Securities Ltd, is wholly owned by joint guarantor MAF, a UAE-based company established in
1992. MAF is primarily engaged in the development and management of shopping malls, hotels, hypermarkets, residential
communities and supermarkets across the Middle East, Africa and Central Asia. Its hypermarket business is run under its
longstanding and successful regional franchise with international food retailer Carrefour. MAF currently operates 29
shopping malls, 13 hotels and over 1.5mn sqm of gross leasable land area of prime retail space. The company has
presence in 17 countries while deriving 48% of total revenue from the UAE in H1 FY21. MAF conducts its business under
four segments: Retail (83.6% of revenue for H1 FY21), Properties (11.3%), Leisure, Entertainment and Cinemas (LEC;
3.4%) and Lifestyle (1.7%).
Key bond metrics
Currency USD
ISIN XS1567903627
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam Source: Sustainalytics
Senior Investment Strategist
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 8 October 2021 at 11:00am
Joint venture projects limit transparency Sustainalytics ESG risk rating
China Jinmao Holdings 22.7Medium
Risk
Thus, we add Franshion Brilliant 4% perpetual c.2023
(USD) (ISIN: XS1637332187, Price: 99, TW: 4.85%) to our
preferred list as we like the attractive relative value offered
by a senior perpetual issued by an investment grade-rated
developer with only 1.24 years left until next call date. The
perpetual compares favourably against China Resources
Land 3.75% perpetual c.2024 (USD) (YTW: 2.59%) after
adjusting for differences in ratings, call dates and operation
scale.
Regulatory risks might restrict business operations
Escalating default risk could negatively impact outlook
Risk of non-call might lead to a longer holding period
Total Debt/EBITDA 10.1x
EBITDA/Interest Expense 4.6x
Net Debt/Equity 56.4%
Source: Bloomberg, Standard Chartered
Total Equity 16,545
Total Debt 15,316
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Senior Investment
Strategist
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
8 October 2021, 5:49 PM SST
Fixed Income Trade Note
Consolidated financial information
In USD million equivalent, unless stated. As of 1H FY 2021
(30 June 2021). LTM = Last 12 months
Revenue (LTM) 11,545
Investment case
We like China Jinmao Holdings (Jinmao) for its successful
operating track record, ownership rofile and balance sheet.
Franshion Brilliant is Jinmao’s fully-owned bond-issuing
entity.
Jinmao has a long and successful operating track record in
upper tier cities and ranks in the top 5 in the industry in
terms of contracted sales. Jinmao is about 35% indirectly
owned by Sinochem Group, one of the State-Owned-
Enterprises supervised by the central State-owned Assets
Supervision and Administration Commission (SASAC). This
offers the prospect of arental support, should that be
needed.
EBITDA (LTM) 581
Net Income (LTM) -34
Total Assets 68,155
While regulatory scrutiny on the industry since late 2020
has imposed a headwind for the industry, we believe
Jinmao’s strong balance sheet places it in a stronger
position relative to other developers. This reflects in its
investment grade rating and the fact that it met all the Three
Red Lines’ regulatory conditions based on its H1 FY21
results.
China Jinmao Holdings Summary of views
Franshion Brilliant 4% perpetual c.2023 (USD)
Rationale: Relative value, short duration
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
China Jinmao Group (Jinmao) is a mid-sized Chinese real estate developer that focused on high-end residential and
commercial premises development. It also engaged in commercial leasing and retail operations and hotel businesses in
major cities and popular vacation destinations in China. As of end-2020, the company is 35.15% indirectly owned by
Sinochem Group, one of the State-Owned-Enterprises supervised by the central State-owned Assets Supervision and
Administration Commission (SASAC). Jinmao has an established track record in upper tier cities. As of end-2020, it was
engaged in 270 city projects in 51 core cities, including Beijing, Tianjin, Shanghai and Guangzhou.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Coupon 4%
Coupon Reset 5Y UST + 5.238%
Key bond metrics
Rating (S&P) NR
Issue Size 500mn
Capital Structure Senior Unsecured
Maturity Perpetual
Call Date 3-Jan-2023
Currency USD
ISIN XS1637332187
Franshion Brilliant 4% perpetual c.2023 (USD)
Our view is based on a 12-month investment horizon. We have not
recommended this bond previously.
Wealth Management Chief Investment Office | 8 October 2021, 5:49 PM SST
In 1H FY21 (ending 30 June 21), Jinmao has recorded a 135.2% y/y increase in total revenue due to an increase in gross
floor area (GFA) delivered. EBITDA also grew by 9.5% y/y despite a drop in EBITDA margin to 14.4% from 30.8% a year
ago. While gearing (measured by total debt to EBITDA) has surged to 10.1x from 9.1x a year ago, Jinmao has satisfied all
the Three Red Lines with its 1H FY21 results.
The bond has a Change of Control clause where the
company has the option to make an offer to repurchase the
bond at 101 (prior 3 Jan 2023) or at 100 (on or after 3 Jan
2023) if for example, Sinochem Group ceases to be the
controlling and the largest shareholder of Jinmao AND
there is a rating decline. If the company decided not to
repurchase the bond, the coupon will be increased by 3%.
Source: Bloomberg, Standard Chartered
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam Source: Sustainalytics
Senior Investment Strategist
Fixed Income Trade Note
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
8 October 2021, 5:49 PM SST
19,645
Total Debt 3,432
Total Equity 7,527
Total Debt/EBITDA 21.4x
EBITDA/Interest Expense 1.5x
Net Debt/Equity 4.6%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 12 October 2021 at 10:27am SST
NWS Holdings Ltd Summary of views
Celestial Miles Ltd 5.75% Perpetual c.2024 (USD)
Basis: Relative value, high coupon step-up
NWS Holdings Ltd - Consolidated financial information
In USD million equivalent, unless stated. As of 1H FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj 3,635
EBITDA, Adj 248
Net Income, Adj 227
Total Assets
32.0 High Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Senior Investment
Strategist
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
We like NWS Holdings Ltd (NWS) for its diversified
business portfolio, which includes toll oads, aircraft leasing,
insurance and construction services, from which it
generates around 81% of its attributable operating profit
(AOP). We also favour NWS for its strategic importance to
the parent – New World Development Company (NWD) –
being the flagship conglomerate subsidiary of the group.
In addition, we like the prudent financial measures, such as
reducing debt and monetizing non-core assets to improve
balance sheet healthiness. NWS also has a robust liquidity
profile, which is sufficient to cover its short-term debt. We
also view the business portfolio optimisation implemented
by NWS to simplify organisational structure to focus on and
expand core businesses positively.
In our assessment, the Celestial Miles Ltd 5.75%
perpetual c.2024 (USD) (ISIN: XS1940852145, Price:
102.702, YTW: 4.50%) offers attractive yield and relative
value, compared with senior bonds issued by its parent,
New World Development (NWD) 4.375% 2022 (YTM:
1.66%). It also compares favourably versus the NWD
Finance 5.25% perpetual c.2026 (YTW: 4.59%) after
adjusting for differences in call dates. Moreover, we like the
bond for its high coupon step-up, which suggests a
relatively high likelihood of call at the first call date. We also
derive comfort from the protection bondholders receive in
the event of a change of control (see Bond Structure on
page 2).
COVID-19 risks: Lockdown measures and government
policies such as toll-fee exemptions and border restrictions
may impact company operations significantly
Risk of non-call might lead to investors holding the bond
for an extended period of time
Execution and regulatory risk stemmed from the recently
acquired insurance business
Sustainalytics ESG risk rating
NWS Holdings Ltd
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Wealth Management Chief Investment Office | 12 October 2021, 10:45 AM SST
Celestial Miles Ltd 5.75% perpetual c.2024 (USD)
Key bond metrics
Currency USD
ISIN XS1940852145
Rating (S&P) NR
Coupon 6%
Coupon Reset 5Y UST + 8.205%
The issuer, Celestial Miles, is an indirect wholly owned subsidiary of NWS, which is subsequently the guarantor of the
perpetual. NWS, headquartered in Hong Kong, is the diversified industries flagship of NWD, which has a 60.9% ownership
in the company. NWS’s operations are primarily based in Hong Kong and China and its core businesses include toll roads,
commercial aircraft leasing, construction and insurance. It also manages a strategic portfolio, comprising companies in the
logistics and facilities management sectors.
NWS’s revenue increased 9.3% y/y to USD 3,635mn in FY21 due to higher contribution from Insurance (56.8% y/y), Road
(47.3% y/y) and Construction (21.9% y/y) segments. This was partially offset by lower contribution from the Facilities
Management business (down 78.4% y/y), combined with the disposal of its Transportation operations. Despite the increase
in revenues, its adjusted EBITDA declined 34.0% y/y to USD 248.2mn, resulting in a decrease in the EBITDA margin to
6.8% from 11.3% in the prior year due to increase in cost of sales (4.8% y/y) and selling, general and administrative
expenses (9.6% y/y). Furthermore, NWS partially redeemed its 4.25% senior notes due 2029 during the year. After the
redemption, USD 635.9mn in principal amount remained outstanding.
During FY21 (ending 30 June 2021), NWS continued its business portfolio optimisation through the disposal of non-core
assets. It sold NWS Transport (exiting the transportation sector) and all its interest in Zhujiang Power Station (Phase II) and
Derun Environment. NWS also reduced its interest in Wai Kee (construction company) from 23.0% to 11.5%. In addition, it
is in the process of disposing all its interest in SUEZ NWS (environmental services company) and Xiamen Container
Terminal Group (XCTG). Total proceeds from the above transactions is estimated to be roughly USD 1.8bn (HKD 14.2bn),
which will be utilised for capital expenditure and dividend distributions.
If the perpetual is not called at the first call date, the coupon
will step up by 500bps and be reset at the prevailing 5Y US
Treasury rate + 8.205%. Coupons are deferrable and
cumulative. Dividend stopper also restricts dividend
payments if the issuer defers coupon payments. In addition,
the issuer can redeem the perpetual at 100 if NWS lose
50% or more of voting rights in the issuer. The coupon will
be increased by 3% if the issuer does not redeem the
perpetual in such an event.
We first initiated the trade on this bond on 12 February 2021. Our
latest recommendation was a BUY on 22 March 2021. Our view is
based on a 12-month investment horizon.
Coupon Type Deferrable, cumulative
Maturity Perpetual
Call Date 31-Jan-2024
Source: Bloomberg, Standard Chartered
Issue Size 1.3bn
Capital Structure Senior Unsecured
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Key risks
Sustainalytics ESG risk rating
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
GLP Pte Ltd 15.4 Low Risk
Manpreet Gill Abhilash Narayan
Head Senior Investment Strategist
FICC Investment Strategy
Cedric Lam Source: Sustainalytics
Senior Investment Strategist
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
*Total debt = Loans and borrowings (short term + long term)
We favour GLP Pte Ltd (GLP) for its scale and leading
market position in the logistics and real estate industry with
presence in 17 countries. Despite its short operating
history, GLP has proven to develop and manage
businesses and properties successfully both organically
and via acquisitions. We also take comfort in the company’s
commitment towards maintaining its Investment Grade (IG)
credit rating, given that it is listed as a key performance
metric.
GLP also benefits from a well-diversified tenant mix with
over 1,800 customers across diverse sectors. In addition,
demand for warehousing has risen significantly since the
beginning of the pandemic, especially from E-commerce
and third-party logistic companies, which could improve its
earnings materially. Moreover, GLP’s fund management
arm provides the company with important source of capital
for growth and capital recycling, which is a positive to our
investment case.
We continue to believe GLP Pte Ltd 4.5% perpetual c.
2026 (USD) (ISIN: XS2340147813, Price: 95.675, YTW:
5.58%) offers attractive yield and relative value for a
subordinated perpetual from a leading investor and
operator of logistics properties and real estate. It stacks up
favourably versus GLP Pte Ltd 3.875% 2025 (YTM: 2.64%)
after adjusting for differences in ratings and call date. The
bond also seems fairly valued versus ESR Cayman 5.65%
perpetual c.2026 (YTW: 5.20%) after adjusting for
differences in scale, operating track
record and structure.
Concentration risk as nearly two-thirds of GLP’s total
revenue is derived from China
Lower transparency as GLP is a private, unlisted
company.
Total Equity 23,829
Total Cash 2,761
Source:Offering circular, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 12 October 20201 at 6:14pm SST
Wealth Management Chief Investment Office
12 October 2021, 6:25 PM SST
Fixed Income Trade NoteGLP Pte. Ltd. Summary of views
GLP Pte. Ltd. 4.5% perpetual c. 2026
(USD)Rationale: Attractive yield, relative value
GLP Pte Ltd - Consolidated financial information
In USD million equivalent, unless stated. For 1H FY 2021
(ended 30 June 2021).
Revenue 845
Operating Income 537
Net Income 894
Total Assets 44,733
Total Debt* 15,469
Ratings downgrade risk as Fitch has GLP on negative
outlook
Rapid debt-funded expansion (or off-balance sheet
financing) could lead to a deterioration in credit metrics
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
GLP Pte. Ltd. 4.5% perpetual c. 2026 (USD)
Key bond metrics
Currency USD
ISIN XS2340147813
Wealth Management Chief Investment Office | 12 October 2021, 6:25 PM SST
The issuer, GLP Pte Ltd, is one of the largest global investors and operators in logistics real estate and acts as the holding
company for a number of subsidiaries. Headquartered in Singapore, it was listed on the Main Board of the SGX-ST in 2010,
but was subsequently privatised and delisted from the exchange in 2018. GLP primarily invests and operates businesses in
logistics real estate, industrial property, cold storage, business parks, commercial and office spaces, mixed development
property, among others. It owns, manages and leases out an extensive network of approximately 2,700 completed
properties across China, Japan, Brazil, Europe, India, Vietnam and the US, with a combined gross floor area and gross
lease area of roughly 50mn sq. m. as of 30 June 2021. It also has an additional 29.2mn sq. m. of land held for future
development.
In addition, GLP offers fund management services, investing on behalf of many of the world’s largest pension funds,
sovereign wealth funds and financial institutions. As of 30 June 2021, it had USD 118bn of assets under management
(AUM), including USD 90bn in real estate AUM.
During H1 FY21 (ending 30 June 2021), GLP’s revenue increased 12.7% y/y to USD 845mn, primarily due to higher fund
management fees (123.2% y/y) and rental and related income (13.4%). It derived the majority of its revenue from China
(72.0%), followed by Japan (21.5%), Europe (4.2%), the US (1.6%) and Brazil (0.7%). However, GLP’s operating income
declined 3.4% y/y to USD 537mn and the margin fell to 63.5% from 74.1% in the prior year, due to an increase in property-
related expenses (25.1% y/y) and other expenses (67.0%).
The perpetual is subordinated and callable on 17 May
2026. If it is not called, the coupon will reset to the
prevailing 5Y US Treasury rate + 3.735%. The coupon will
step up by 25bps in 2031 and an additional 75bps in 2046.
Coupon payments are deferrable (cumulative and
compounding) at the issuer’s discretion. However, if
coupons are not paid in full, management cannot make any
equity distributions (dividend stopper) or buy back shares.
According to S&P, the bond will lose equity credit after the
first call date.
Maturity Perpetual
Call Date 17-May-2026
Coupon 4.50%
Rating (S&P) BB
Issue Size 850mn
Capital Structure Subordinated
We first initiated the trade on this bond on 14 May 2021. Our view
is based on a 12-month investment horizon.
Coupon Reset 5Y UST + 3.735%
Coupon Type Deferrable, cumulative
Source: Bloomberg, Standard Chartered
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
We favour New World Development (NWD) for its
diversified business profile and proven operating track
record of over 50 years. We also like NWD’s core property
development business (accounted for 33% of FY21
revenue) for its land bank exposure to the Greater Bay Area
and robust growth in contracted sales for the year. We also
derive comfort from the steady increase in rental income
generated from its investment portfolio over the recent
years. Furthermore, it has a strong investment property
pipeline and aims to achieve recurring profits of 50% by
FY24 cf. 39% in FY21 through this segment.
In addition, we like NWD’s exposure to the infrastructure
sector (toll roads) through its subsidiary NWS Holdings Ltd,
which would generate sustainable cash flow to the
company. Although NWD has relatively high leverage, we
take comfort in its disposal of non-core assets to maximise
capital efficiency.
In our opinion, NWD Finance 4.125% perpetual c.2028
(USD) (ISIN: XS2348062899, Price: 94.222, YTW: 5.20%)
provides an attractive yield for a senior unsecured
perpetual, with its bondholder-friendly structure and the
high probability of a call (see Bond structure on page 2). It
also stacks up favourably versus other Hong Kong-based
developers and conglomerates such as CK Asset Holdings
Limited perpetual 3.5% 2023 (YTM: 3.71%) and Nan Fung
Group 5% 2028 (YTM: 3.50%) after adjusting for ratings,
call dates, structure and differences in business focus.
A broad slowdown in China and Hong Kong could
negatively impact property demand and the company’s
profitability
Risk of non-call might lead to investors holding the bond
for an extended period of time
Senior Investment
Strategist
Sustainalytics ESG risk rating
New World Development 14.5 Low Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Total Debt/EBITDA 14.5x
EBITDA/Interest Expense 4.1x
Total Debt/Total Assets 29.2%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 12 October 2021 at 5:51 pm SST
Wealth Management Chief Investment Office
12 October 2021, 6:05 PM SST
Fixed Income Trade NoteNew World Development Summary of views
NWD Finance 4.125% perpetual c.2028 (USD)
New World Development - Consolidated financial
information
In USD million equivalent, unless stated. As of FY 2021 (30
June 2021)
Revenue, Adj 8,797
EBITDA, Adj 2,090
Net Income, Adj 310
Total Assets
Total Equity
80,742
Rationale: Attractive relative value
Total Debt 23,545
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
39,168
Regulatory risks owing to exposure to multiple industries,
especially real estate
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
NWD Finance 4.125% perpetual c.2028 (USD)
10-Mar-2028
Rating (S&P) NR
Issue Size 1.2bn
Capital Structure Senior Unsecured
Maturity Perpetual
Key bond metrics
Currency USD
ISIN XS2348062899
Wealth Management Chief Investment Office | 12 October 2021, 6:05 PM SST
NWD Finance is a wholly owned subsidiary of NWD, the guarantor of the perpetual. Headquartered in Hong Kong, NWD is
one of the largest property developers with market capitalisation of USD 10.9bn (HKD 84.6bn) as of 6 October 2021. The
company’s core business areas include property investment and development, investment and operations of roads,
commercial aircraft leasing, insurance and construction in China, Hong Kong and Macau. As of end-June 2021, it had a
land bank with total gross floor area (GFA) of 9.38mn sq. ft. in Hong Kong and 5.69mn sq. ft. in China available for
immediate development.
In recent years, NWD has been restructuring its business through the disposal of non-core assets and recycling and
deploying the proceeds in businesses that provide better returns. In FY21, its major asset disposals include Suez NWS
(provides environmental services) and Citybus and NWFB (transportation services). Total proceeds raised from the
disposals during the year amounted to USD 2.3bn (HKD 18bn).
NWD’s revenue increased to USD 8.8bn (up 16.2% y/y) in FY21, primarily due to higher contribution from the Insurance
(56.7% y/y), Roads (47.2%), Construction (32.9%) and Property Development and Investment (16.4%) segments. This was
partially offset by lower revenues from the Hotel (33.0% y/y) and Other (41.7%) segments. Moreover, Hong Kong remained
the major revenue contributor with 64.7% of revenue, with Mainland China representing the major remainder. Its adjusted
EBITDA also increased 17.9% y/y to USD 2.1bn, which represents a margin improvement to 23.8% cf. 23.4% in FY20.
The perpetual is callable on 10 March 2028. If not called,
the coupon will reset to the prevailing 5Y US Treasury rate
+ initial spread + 300bps (step-up). It also has a change of
control call clause where the issuer, at its discretion can
redeem the perpetual at par if more than 50% of voting
rights of the issued capital of NWD is acquired. However,
the coupon will increase by 3% if the issuer opts not to
redeem the perpetual.
Coupon Reset 5Y UST + 5.858%
Coupon Type Deferrable, cumulative
Coupon 4.13%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 4 June 2021. Our view
is based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Call Date
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Softbank Group Corp 26.0Medium
Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Mark-to-market earnings volatility from SoftBank’s
securities trading division, which involves the use of
derivatives
We like SoftBank Group for its long operating track record,
diversified operations across multiple sectors, geographical
regions and solid investment portfolio. Despite SoftBank’s
elevated debt levels, we derive comfort from its track record
of divestment, which demonstrates its ability to monetise
assets. We also like its stable cash flows generated by its
domestic telecom business, in addition to the fact that the
value of its equity investments cover 96% of its total debt.
We believe SoftBank Group Corp 4.625% 2028 (USD)
(ISIN: XS2361253433, Price: 95.525, YTM: 5.43%) offers
an attractive yield as well. It stacks up as favourable versus
Nissan Motors 4.345% 2027 (YTM: 2.61%) after adjusting
for differences in rating and maturities.
Key man risk from Founder and CEO Masayoshi Son, who
has significant influence over the company
Regulatory risk may negatively impact the value of
Softbank’s investment holdings
Senior Investment
Strategist
Sustainalytics ESG risk rating
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
12 October 2021, 7:10 PM SST
Fixed Income Trade NoteSoftBank Group Corp Summary of views
SoftBank 4.625% 2028 (USD)
Rationale: Relative value, attractive yield
SoftBank Group Corp - Consolidated financial
information
In USD million equivalent, unless stated. As of Q1 FY
2022 (30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 125,988
Net Debt/Equity 119.7%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 12 October 2021 at 6:57 pm SST
EBITDA, Adj (LTM) 84,428
Net Income, Adj (LTM) 39,517
Total Assets 424,751
Total Debt 191,140
Total Equity 112,441
Total Debt/EBITDA 2.3x
EBITDA/Interest Expense 20.5x
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
BB+
Issue Size 1bn
Maturity 6-Jul-2028
SoftBank 4.625% 2028 (USD)
The bond is senior unsecured. It has a change of control
clause under which the company is required to make an
offer to repurchase the bond at 100 if any person other than
Masayoshi Son or his affiliates became the beneficial owner
of more than 50% of the voting stock along with a rating
downgrade.
Capital Structure Senior Unsecured
In Q1 FY22 (ending 30 June 2021), Softbank Group’s adjusted revenue increased 52.4% y/y to USD 24.3bn owing to
higher gain on investments at Latin America Fund and loss of sale of business incurred in Q1 FY21. Adjusted EBITDA
grew 91.8% y/y to USD 13.8bn. As of Q1 FY22, total debt to EBITDA slightly weakened to 2.3x compared with 2.2x in FY21
owing to new debt issuances. In June 2021, the company issued hybrid notes for JPY 405bn due 2056 for early redemption
of domestic hybrid notes due December 2021. In July 2021, Softbank issued four USD-denominated senior notes totaling
USD 3.9bn and EUR-denominated senior notes totaling EUR 3.0bn. The proceeds from the issuances will be used for
refinancing and general corporate purposes.
We first initiated the trade on this bond on 9 July 2021. Our view is
based on a 12-month investment horizon.
Call Date 6-Apr-2028
ISIN XS2238561794
Rating (S&P)
Wealth Management Chief Investment Office | 12 October 2021, 7:10 PM SST
Key bond metrics
Currency USD
Established in 1981, SoftBank Group is a holding company which invests in a variety of ventures in Japan and abroad.
Over the past decade, the company has transitioned from being a telecom provider to a strategic holding company. It is
largely owned by CEO/Chairman Masayoshi Son (26.7% stake as of March 2021). SoftBank’s investment portfolio has
been growing continuously, with benchmark investments such as Alibaba, Grab, Uber, DiDi, T-Mobile, NVIDIA, ByteDance
etc. Its recently established venture capital arm, SoftBank Vision Fund, focusses on innovative technology investments,
such as connectivity, Internet-of-Things and AI-focused companies.
Coupon 4.625%
Source: Bloomberg, Standard Chartered
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
Solvency Ratio 4
Combined Ratio 98%
Return on Investment 3%
Source: Company filings, Standard Chartered
In our assessment, Peak Re BVI 5.35% perpetual c.2025
(USD) (ISIN: XS2239623437, Price: 102.807, YTW: 4.58%)
offers attractive yield and reasonable relative value versus
TongYang Life Insurance 5.25% perpetual c.2025 (YTW:
4.04%) and FWD Group 6.375% perpetual c.2024 (YTW:
5.60%) after adjusting for differences in the business
nature, ratings and duration.
Net Premium Earned 1,341
Operating Income 81
Net Income 87
Total Assets 5,661
Total Equity 1,487
Peak Reinsurance Co. LimitedBasis: Attractive yield, relative value
Peak Re BVI 5.35% perpetual c.2025 (USD)
We favour Peak Reinsurance Co. Ltd (Peak Re) for its
established market position in Asia, growing global
presence and broad product offering. We also like Peak
Re’s performance and execution of strategy over its short
operating history, which has led to the rapid expansion of its
business; its gross written premiums (GWP) and total
assets grew at a CAGR of 29.5% and 30.5%, respectively,
from FY16 to FY20.
In addition, Peak Re has remained profitable since 2013.
Despite profitability remaining relatively weak (combined
ratio which measures incurred losses and expenses to
earned premium was 97.6% for FY20), we derive comfort
from its robust balance sheet and high capitalisation levels,
which are well above regulatory requirements. We expect
Peak Re’s profitability to improve gradually due to lower Life
and Health (L&H) claims following the COVID-19 vaccine
rollouts and its focus on offering tailored solutions.
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
18 October 2021, 5:25 PM SST
Fixed Income Trade NoteSummary of views
Peak Reinsurance - Consolidated financial information
In USD million equivalent, unless stated. As of FY 2020 (31
December 2020). LTM = Last 12 months
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 15 October 2021 at 6:10pm SST
Relatively short operating history and low brand
recognition in the industry.
Geographical risks arising from the increasing
diversification of its business portfolio through
acquisitions in recent years.
Shareholder risks stemming from its major shareholder,
Fosun International, which is a High Yield rated investment
company with relatively high leverage that limits the
possibility of support if required.
Senior Investment
Strategist
Sustainalytics ESG risk rating
Peak Reinsurance Co. Ltd NR -
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Peak Re BVI 5.35% perpetual c.2025 (USD)
Issue Size 250mn
Capital Structure Subordinated
Maturity Perpetual
Call Date 28-Oct-2025
Source: Bloomberg, Standard Chartered
Coupon 5.35%
Coupon Reset 5Y UST + 5.011%
Coupon Type Deferrable, cumulative
Rating (S&P)
XS2239623437
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
NR
The perpetual is a subordinated obligation. If it is not called
on the next call date (28 October 2025), its coupon will be
reset to the prevailing 5Y US Treasury rate + 5.011%. If not
called on or before 28 October 2030, its coupon will be
reset to the prevailing 5Y US Treasury rate + 6.011%.
Coupons are deferrable and cumulative. A dividend stopper
clause restricts dividend payments if the issuer defers
coupon payments.
Key bond metrics
Currency USD
ISIN
Peak Re BVI, the issuer, is a wholly owned subsidiary of Peak Re (guarantor) and acts as its financing entity. Established
in 2012 and headquartered in Hong Kong, Peak Re is a privately owned global reinsurer owned by Fosun International
(87% stake) and Prudential Financial Inc. (13%). The company’s main line of business includes Property and Casualty
(P&C), L&H Reinsurance and Insurance-linked Securities (ILS). Peak Re is one of the fastest growing reinsurers serving
586 clients across 68 markets and is ranked 29 in the Top 40 Global Reinsurers for 2020 by S&P in terms of net
reinsurance premiums written.
On 27 July 2021, Peak Re announced it had reached an agreement to acquire the remaining 50% stake in NAGICO
Holdings Ltd (NAGICO), upon which it would become a wholly owned subsidiary. NAGICO is a composite insurer operating
in the Caribbean, and the transaction would further strengthen Peak Re’s strategy to diversify and expand its global
portfolio.
In FY20 (ending 31 December 2020), Peak Re’s total revenue increased 10.2% y/y to USD 1,515mn, primarily due to
higher net reinsurance premiums earned, and commission and investment income. It derived the majority of its GWP from
Asia Pacific (61%), followed by the Americas (29%) and EMEA (10%). It generated a return of 3.4% on invested assets in
FY20 versus 3.0% in FY19; however, its combined ratio dipped to 97.6% from 93.0% over the same period. While Peak Re
is still relatively small compared to its global reinsurance peers, it has maintained strong capitalisation levels with its
solvency ratio at 429% compared to the regulatory requirement of 200% under the Hong Kong regulatory standard.
Wealth Management Chief Investment Office | 18 October 2021, 5:25 PM SST
We first initiated the trade on this bond on 23 October 2020. Our
latest recommendation was a BUY on 26 March 2021. Our view is
based on a 12-month investment horizon.
PUBLIC#
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Key risks
Source: Sustainalytics
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Thus, we add British Telecommunications 4.25% 2081
c.2026 (USD) (ISIN: USG15820EA02, Price: 99.75, YTW:
4.30%) as we like the attractive yield offered by a leading
UK telecom operator. The bond loses equity credit from
S&P at first coupon reset date, providing BT an incentive to
call it back. In our opinion, the bond offers compelling
relative valuation when compared to other European
telecommunication services provider, such as Vodafone
3.25% 2081 c.2026 (USD) (YTW: 3.71%) and Koninklijke
KPN 7% 2073 c.2023 (USD) (YTW: 3.13%) after
accounting for differences in maturity dates and credit
profiles.
Risk of leverage buyout may lead to shareholders and
management shuffle.
Intensive competition in the UK telecommunication
market could lead to earnings volatility and higher CAPEX
investment
Regulatory risks pertaining to the UK telecom sector
Sustainalytics ESG risk rating
BT Group PLC 17.0 Low Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Senior Investment
Strategist
156%
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 3 December 2021 at 3:43 pm SST.
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
3 December 2021, 5:07 PM SST
Fixed Income Trade NoteBritish Telecommunications
PLC
Summary of views
British Telecommunications 4.25% 2081 c.2026 (USD)
Basis: Relative value, attractive yield, leading UK
telecommunication services provider
BT Group PLC –Consolidated financial information
In USD million equivalent, unless stated. As of 1H FY21 (30
September 2021).LTM = Last 12 months
Revenue, Adj (LTM) 28,813
EBITDA, Adj (LTM) 10,188
We like British Telecommunications PLC (BT) for its long
and health operating track record since establishment in
1984 in the United Kingdom. BT is the key operating
subsidiary of BT Group PLC (BT Group) and we view its
market leadership in the telecommunications sector and the
diversified communication services provided, as a credit
positive. BT Group is engaged in a wide-ranging
transformation program through simplification of products,
process, IT systems and networks.
In November 2021, Reuters reported that both Patrick Drahi
(founder of Altice UK) and Deutsche Telekom intended to
raise their stake in BT Group. While it is still early to assess
the implications for the company, we derive comfort from
the Change of Control clause which should provide some
protection to investors (see Bond Structure).
Net Income, Adj (LTM) 2,595
Total Assets 69,435
Total Debt 30,730
Total Equity 16,241
Total Debt/EBITDA 3.3x
EBITDA/Interest Expense 8.4x
Net Debt/Equity
PUBLIC#
Standard Chartered Bank
About the issuer
Bond Structure
British Telecommunications 4.25% 2081 c.2026 (USD)
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Issue Size 500mn
Capital Structure Junior Subordinated
Maturity 23-Nov-1981
Next Call Date 23-Nov-2026
Coupon 4.25%
Coupon Structure Deferrable, cumulative
Source: Bloomberg, Standard Chartered
Our view is based on a 12-month investment horizon. We
have not recommended this bond previously.
Wealth Management Chief Investment Office | 18 October 2021, 5:25 PM SST
Incorporated in 1984, British Telecommunications PLC (BT) is a telecommunications service provider that
primarily operates in the United Kingdom. BT is a wholly owned subsidiary of BT Group PLC (BT Group) and is
its principal operating subsidiary. It is currently one of the market leaders in the sector and is engaged in the
provision of fixed, mobile and converged connectivity solutions, including broadband, TV, networking, IT
services and related services and applications. It is engaged in the selling of products and services to
consumers, small and medium sized enterprises and the public sector. BT has 4 customer facing units,
including Consumer, Enterprise, Global and Openreach.
BT provides mobile and fixed broadband services to more than 30 million consumers and 1 million businesses
and public sector customers in the UK. It has a strong presence across the European continent with offices in
Spain, France, The Netherlands, Belgium, Germany, Switzerland, Italy, Sweden as well as Central & Eastern
Europe and Russia.
The bond is issued by British Telecommunications PLC and
is guaranteed by BT Group PLC. The bond is subjected to
call at par from 23 Nov 2026 to 22 Feb 2027 (inclusive). If it
is not called on 23 Feb 2027, the coupon will be reset at
prevailing 5Y US Treasury rate + 2.985%. If the bond
remains not called on 23 Feb 2032, 2037 and 2042, the
coupon will be reset at prevailing 5Y US Treasury rate +
3.235%. If the bond remains uncalled on 23 Feb 2047, the
coupon will be reset at prevailing 5Y US Treasury rate +
3.985%. There is a Change of Control clause wherein the
issuer could elect to redeem the bond at 101% if (1) BT
Group own less than 50% of stake in BT; AND there is a
rating downgrade (see Offering Circular for more detail).
Should the issuer choose to not call the bond in a Change
of Control event, the coupon would step-up by 500bp.
Key bond metrics
Currency USD
ISIN USG15820EA02
Rating (S&P) BB+
PUBLIC#
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist Source: Sustainalytics
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Cash and Cash Equivalents 475
Total Debt 17,516
Total Equity 20,362
Net Debt/Equity 0.8x
VMED O2 UK Ltd (Updated) Summary of views
Virgin Media Secured Finance 4.25% 2030 c.2024 (GBP)
Rationale: Attractive relative value
VMED O2 UK Ltd –Consolidated financial information
In GBP million equivalent, unless stated. As of Q2 FY 2021
(30 June 2021).
Revenue* 853
Operating Profit* 7
Net Profit* (113)
Total Assets 44,085
Margin compression given the highly competitive industry
dynamics
Regulatory changes in data protection laws and VAT, which
can negatively impact profit margins
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Senior Investment Strategist
VMED O2 UK (VMED O2) is a joint venture (JV) formed on
1 June 2021 through the merger of Virgin Media Inc. and
O2 UK’s operations. The combined entity is one of the
largest integrated telecommunication operators in the UK,
providing 99% data and voice coverage to the region’s
population. As of 30 June 2021, it had a subscriber base of
5.7mn fixed-line customers (of which 97% are broadband
connections) and 40.9mn retail and wholesale mobile
connections.
The company benefits from the leading and competitive
positioning of the combined entities: (1) Virgin Media is the
largest cable television and the fastest broadband provider
(market share of 20% of the total addressable broadband
market) and (2) O2 UK is the largest mobile network
operator (market share of 33% [in terms of subscriptions] in
2020). Moreover, VMED O2 has forecast synergies of USD
747bn (GBP 540bn) annually by 2026 through cross-selling
opportunities, cost savings, shared infrastructure and
capital spending (see About the issuer section on page 2).
In our assessment, Virgin Media Secured Finance 4.25%
2030 c.2024 (GBP) (ISIN: XS2062666602, Price: 99.061,
YTW: 4.39%) offers attractive yield and relative value for a
GBP-denominated secured bond issued by a leading UK
telecommunication services provider. It also stacks up as
attractive versus other GBP-denominated bonds issued by
UK telecommunication services providers, such as British
Telecommunications 3.125% 2031 (YTM: 2.85%) and Sky
Limited 4.0% 2029 (YTM: 1.90%), after adjusting for
differences in ratings and maturity dates.
*Represents one month (June 2021) of operations as the new entity
Execution risk arising from the joint venture partnership
Sustainalytics ESG risk rating
VMED O2 UK Ltd NR -
Low and negligible risk-rated companies constitute part of Standard
Chartered Bank’s Sustainable Investments universe, which is a
subset of the CIO office’s equity core universe
Source: Company filings, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 21 October 2021 at 5:21 pm SST
Wealth Management Chief Investment Office
22 October 2021, 8:25 PM SST
Fixed Income Trade Note
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Key bond metrics
Currency GBP
ISIN XS2062666602
Wealth Management Chief Investment Office | 22 October 2021, 8:25 PM SST
This
Virgin Media Secured Finance 4.25% 2030 c.2024
(GBP)
The bond is guaranteed on a senior basis by VMED O2 and
certain subsidiaries. It is also secured by liens on
substantially all the assets of these subsidiaries. The bond
is subject to call on 15 October 2024 at 102.125. If not
called, the bond could be called on 15 October 2025 at
101.063 and on 15 October 2026 at 100.531, and
subsequently every same date until 2030.
Maturity 15-Jan-2030
Call Date 15-Oct-2024
Coupon 4.25%
Rating (S&P) BB-
Issue Size 635mn
Capital Structure 1st lien
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 18 June 2021. Our view
is based on a 12-month investment horizon.
The issuer, Virgin Media Secured Finance Plc, is an indirectly wholly owned subsidiary of VMED O2, a leading integrated
communications provider operating in the UK. VMED O2 was formed on 1 June 2021 through a 50:50 joint venture
between Liberty Global Plc and Telefonica SA to combine the operations of its subsidiaries - Virgin Media and O2 UK.
VMED O2 provides a range of services, including broadband internet, video, fixed-line telephony and mobile services to
residential customers and businesses, and has a network of 430 retail stores and over 18,000 employees.
Through the JV, it expects to realise revenue synergies of USD 152mn (GBP 110mn), cost and capital expenditure savings
of USD 484mn (GBP 350mn) and USD 111mn (GBP 80mn), respectively, by mid-2026. However, it expects to incur
integration costs of USD 969mn (GBP 700mn) through to 2025. In addition, VMED O2 has sufficient spectrum bands to
have the largest 5G coverage footprint in the UK. The company, in July 2029, announced plans to fully upgrade its fixed-
line networks to full fibre-to-the-premise (FFTP) by 2028, which will further improve internet speeds and reduce
maintenance costs.
For the one month of operations (ending 30 June 2021), VMED O2 reported revenue of GBP 852.7mn, operating profits of
GBP 6.5mn and a net loss of GBP 112.5mn. On a pro-forma basis, its revenue for the six months period declined 2.2% y/y
to GBP 5,047.7mn; however, its EBITDA increased 2.8% y/y to GBP 1,863.9mn owing to a decline in cost of sales (2.4%
y/y) and other expenses (11.5%).
PUBLIC#
BUY
BUY
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy Source: Sustainalytics
Cedric Lam
Senior Investment Strategist
We like Olam International Ltd (Olam) for its scale, stable
operating track record and geographical diversification.
Olam has delivered steady business expansion resulting a
robust revenue CAGR of 13.4% during FY15 to FY20. Olam
also benefits from support from its largest shareholders,
Temasek (Singapore’s sovereign investment holding
company) and Mistubishi Corp., which have a 46.3% and
15.0% stake, respectively (as of 27 September 2021). In
our assessment, Olam’s relatively elevated leverage is
partly offset its strong liquidity of nearly USD 13.8bn (SGD
18.6bn; including credit lines) as of 30 June 2021.
Moreover, we derive comfort in Olam as 80-85% of its
revenues is derived from the food category, where demand
is less sensitive to recession or economic downcycles such
as the pandemic.
In our opinion, Olam International 5.5% perpetual c.2022
(SGD) (ISIN: SG7DJ3000005, Price: 101.033, YTW: 4.08%)
offers an attractive yield for a SGD-denominated junior
subordinated perpetual from a large listed company with a
high likelihood of call on the first call date due to its
highcoupon step-up. On a relative basis, it stacks up
favourably versus Olam International 6% 2022 (YTM:
2.27%) after adjusting for differences in maturity and
structure.
Olam International Ltd 5.5% Perpetual
c.2022 (SGD)
Basis: Relative value, attractive yield, high-coupon reset
Olam International Ltd 4% 2026 (SGD)
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
4 October 2021, 5:10 PM SST
Fixed Income Trade NoteOlam International Ltd Summary of bond recommendations
Olam International Ltd – Consolidated financial
information
In USD million equivalent, unless stated. As of H1 FY 2021
(30 June 2021). LTM = Last 12 months
Revenue, Adj (LTM) 30,882
EBITDA, Adj (LTM) 1,422
Net Income, Adj (LTM)
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 4 October 2021 at 4:45 pm SST
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Sustainalytics ESG risk rating
Olam International Ltd 33.5 High risk
Low and negligible risk-rated companies constitute part of Standard
Chartered Bank’s Sustainable Investments universe, which is a
subset of the CIO office’s equity core universe
Prolonged impact of the COVID-19 pandemic could lead
to disruptions in supply chains
Execution risk from its ongoing restructuring plan
The lack of a change of control clause means investors
are not protected if there is a significant change in
ownershipEnvironmental risk related to sourcing from external
suppliers
Senior Investment Strategist
543
Total Assets 23,059
Total Debt 11,184
Total Equity 5,043
Total Debt/EBITDA 11.8x
EBITDA/Interest Expense 3.8x
Net Debt/Equity 169.6%
Source: Bloomberg, Standard Chartered
Basis: Relative value, attractive yield
We also continue to believe Olam International 4% 2026
(SGD) (ISIN: SGXF63577419, Price: 100.792, YTM: 3.80%)
offers attractive yield and relative value for a senior
unsecured bond, as it offers a 104bps pick-up over Frasers
Property 4.25% 2026 (YTM: 2.77%).
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structures
Key bond metrics
ISIN
Issue Size
Rating (S&P)
Wealth Management Chief Investment Office | 4 October 2021, 5:10 PM SST
This
Olam International 5.5% Perpetual c.2022 (SGD) Olam International 4% 2026 (SGD)
Rating (S&P) NR
Established in 1985 and headquartered in Singapore, Olam is a leading food and agri-business, supplying food ingredients,
feed and fibre to 17,300 customers worldwide. The company’s value chain spans over 60 countries and includes farming, a
direct and indirect sourcing network of an estimate 5mn farmers, processing, distribution and trading operations. Olam, with
a market capitalisation of USD 4.7bn (SGD 6.3bn; as of 27 September 2021), ranks among the top 30 largest companies in
the Singapore Stock Exchange in terms of market capitalisation
Since January 2020, the company has reorganised its portfolio into two operating groups – Olam Food Ingredients (OFI)
and Olam Global Agri (OGA) – both of which are held by the parent company, Olam. OFI comprises Olam’s supply chain
businesses in cocoa, coffee, edible nuts, spices and dairy, while OGA comprises grains, animal feed and protein, edible
oils, rice, cotton and commodity financial services. On 13 August 2021, Olam announced that OFI will be seeking a primary
listing on the London Stock Exchange and a concurrent listing on the Singapore Exchange, which is expected to be
completed by H1 FY22. The company is also evaluating a similar strategy for OGA.
Olam reported strong performance in H1 FY21 with revenue of USD 17.1bn (up 40.3% y/y), as sales volumes increased
11.5% y/y to 22.4mn metric tonnes. During the period, both OGA’s and OFI’s revenue increased 61.6% and 15.4% y/y,
respectively. Consequently, it generated adjusted EBITDA of USD 673.2mn (up 47.1% y/y), while the EBITDA margin
improved to 3.9% from 3.7% from the prior year.
The perpetual is junior subordinated and is callable on 11
July 2022. If not called, the coupon will be reset at the
prevailing SGD 5-year swap offer rate + 5.685% (initial
spread + 200bps). Coupon payments are deferrable at the
issuer’s discretion. However, if coupons are not paid,
management cannot make any equity distributions
(dividend stopper) or buy back shares.
Currency SGD
SGXF63577419
NR
600mn
Coupon 4%
Issue Size 350mn
Capital Structure Junior Subordinated
Key bond metrics
Currency SGD
Capital Structure Senior Unsecured
ISIN SG7DJ3000005
Maturity 24-Feb-2026
Source: Bloomberg, Standard Chartered
Maturity Perpetual
Next Call Date 11-Jul-2022
Deferrable, cumulative,
compounding
Source: Bloomberg, Standard Chartered
Our view is based on a 12-month investment horizon. We have not
recommended this bond previously.
We first initiated the trade on this bond on 10 February 2021. Our
view is based on a 12-month investment horizon.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
The bond is senior unsecured due on 24 February 2026.
Coupon 5.50%
Coupon Reset 5Y SGD Swap + 5.685%
Coupon Type
PUBLIC#
Total Equity 3,263
Total Debt/EBITDA 12.2x
EBITDA/Interest 3.8x%
Net Debt/Equity 68.9%
Key risks
NEGL LOW MED HIGH SEVERE
0-10 10-20 20-30 30-40 40+
Manpreet Gill Abhilash Narayan
Head
FICC Investment Strategy
Cedric Lam
Senior Investment Strategist
Source: Sustainalytics
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
20 August 2021, 5:45 PM SST
Fixed Income Trade NoteSummary of views
Mapletree North Asia Commercial Trust 3.5% perpetual
c.2026 (SGD)
Rationale: Attractive relative value, rare issuer
Mapletree North Asia
Commercial Trust
Consolidated financial information
Senior Investment StrategistMapletree North Asia Commercial Trust 16.5 Low Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Structural changes in consumer behaviour could lead to
revenue and profit volatility.
Global semiconductor shortage might affect production,
which could lead to a decline in originations
Poor performance of its parent company could result in a
decline in new loans or leases and trigger a rating
downgrade
Sustainalytics ESG risk rating
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 20 August 2021 at 12:13pm SST
We derive comfort from its defensive business nature and
stable operating performance. Occupancy rate of its key
premises have been consistently maintained at 97% or
above. The tenancy was marginally impacted by the COVID-
19 pandemic due to surging demand for business parks
from fast growing business sector, such as
telecommunications, media and technology sectors.
Thus, we add Mapletree North Asia Commercial Trust
3.5% perpetual c.2026 (SGD) (ISIN: SGXF49184645,
Price: 99.2, YTW: 3.68%) as relative value looks attractive
while compared to other SGD-denominated REIT bonds,
such as Ascendas REIT 3% perpetual c.2025 (SGD) (YTW:
2.92%) and Mapletree Industrial Trust 3.15% perpetual
c.2026 (SGD) (YTW: 2.87%) after adjusting for differences
in ratings, call dates and business focus.
In USD million equivalent, unless stated. As of FY 2020 (31
December 2020). LTM = last 12 months
Revenue 387
Operating Income 296
Net Income 158
Total Assets 6,018
Total Debt 2,434
We like Mapletree North Asia Commercial Trust (MNACT)
for its geographically diversified property portfolio spread
across North East Asia. We also like the high asset quality
of its portfolio, which includes signature premises such as
the Festival Walk in Hong Kong.
MNACT also benefits from strong ownership profile.
Mapletree Investments Pte Ltd, the sponsor who currently
owns 37% of stake in MNACT, is wholly owned by
Temasek.
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Ford Motor Credit 4.125% 2024 (SGD)
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Coupon 4.125%
Source: Bloomberg, Standard Chartered
We first initiated the trade on this bond on 31 January 2020. Our
latest recommendation was a BUY on 16 February 2021. Our view
is based on a 12-month investment horizon.
The bond is senior unsecured.
Key bond metrics
Currency SGD
ISIN XS2008854650
Rating (S&P) BB+
Issue Size 300mn
In Q2 FY21 (ending 30 June 2021), Ford Credit’s adjusted revenue declined 0.9% y/y to USD2.0bn as production
decreased due to semiconductor shortage, which affected originations. However, adjusted operating income increased
2.0x y/y to USD1.6bn, mainly due to favourable operating lease residual performance and a decline in credit loss reserve
owing to lower COVID-19-related losses. As of Q2 FY21, Ford Credit’s loss to receivables ratio improved to -0.1% from
0.2% in Q1 FY21 due to strong credit recoveries.
Wealth Management Chief Investment Office | 20 August 2021, 5:45 PM SST
Incorporated in 1959, Ford Credit is the indirect, wholly owned automotive financial services arm of Ford, which is one of
the largest auto manufacturers with a global market share of 4.9% for Q2 FY21. The two companies are bound by a
Relationship Agreement, whereby Ford Credit can request capital contributions from Ford if its managed leverage level
exceeds 11.5x for a calendar quarter. Ford Credit accounted for roughly 9.7% of Ford’s Q2 FY21 revenue. Ford Motor
Credit generates its revenue primarily by providing vehicle-related financing as well as leasing activities through its network
of dealers. This consists of payments made under retail instalment sales and dealer financing programmes, and also lease
contracts among others. In Q2 FY21, Ford Credit generated 86.9% of its revenue from Americas, while Asia Pacific and
Europe accounted for 9.0% and 4.1% of revenue, respectively. In June 2021, Ford Credit announced its plan to wind down
or sell its operations in Argentina and Brazil.
Capital Structure Senior Unsecured
Maturity 20-Jun-2024
PUBLIC#
Total Loans 92,828
Total Debt 121,094
Net Interest Margin 3.10%
Loss to Receivables Ratio 0.1%
Total Debt/Total Assets 7.8x
Key risks
Manpreet Gill Abhilash Narayan NEGL LOW MED HIGH SEVERE
Head 0-10 10-20 20-30 30-40 40+
FICC Investment Strategy Strategist
Cedric Lam
Senior Investment Strategist
Source: Sustainalytics
3 September 2021, 12:45 PM SST
Fixed Income Trade NoteFord Motor Credit Summary of views
Ford Motor Credit 4.125% 2024 (SGD)
Basis: Relative value, attractive yield
Ford Motor Credit - Consolidated financial information
In USD million equivalent, unless stated. As of Q2 FY 2021
(30 June 2021). LTM = last 12 months
Net Revenue, Adj (LTM) 11,932
Operating Income, Adj (LTM) 6,286
Net Income, Adj (LTM) 5,258
Total Assets 138,811
In Malaysia, this publication is meant for distribution to Sophisticated Investor who meets the
Securities Commission’s criteria for High Net Worth Individual or High Net Worth Entity. The
below information is distributed for general information only and is not a recommendation to
invest. If you are interested to invest, please speak to your Relationship Manager and complete
your suitability and risk assessment before making any investment decisions.
Wealth Management Chief Investment Office
Ford Motor Credit 31.2 High Risk
Low and negligible risk rated companies constitute part of
Standard Chartered Bank’s Sustainable Investments
universe, which is a subset of the CIO office’s equity core
universe.
Total Equity 13,070
Senior Investment
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Source: Bloomberg, Standard Chartered
Please note yields and spreads are indicative only. Sourced from
Bloomberg on 4 June 2021 at 2:53pm SST
We like Ford Motor Credit (Ford Credit) for its large size
and past track record of strong operating performance. We
also favour its solid ownership profile and good asset
quality that provide better earnings stability. Furthermore,
its limited exposure to operating leases minimise the impact
of loan delinquencies.
In addition, we derive comfort from its robust liquidity of
USD33.0bn (including credit lines) as of Q2 FY21. The
company is also well-capitalised. We also like its strong
balance sheet where debt maturities profile is evenly
spread.
We believe rising used vehicle prices and improving
economic conditions will further aid top-line growth and
strengthen its asset quality. Ford Credit’s rating outlook was
changed to stable from negative in H1 FY21 by two rating
agencies, following similar revisions to parent, Ford Motor
Company (Ford).
Thus, we prefer Ford Credit 4.125% 2024 (SGD) (ISIN
XS2008854650, Price: 102.277, YTM: 3.26%) due to its
attractive yield and relative value on offer from a BB+ rated
senior unsecured bond. It compares favourably versus USD
denominated Ford Credit 5.584% 2024 (YTM: 2.20%)
adjusting for differences in currency. It also stacks up as
attractive versus the USD-denominated General Motor
Financial Co. 3.95% 2024 (YTM: 0.95%) after adjusting for
differences in ratings and currency.
Rising auto loan delinquencies could lead to operational
losses
Regulatory risk from different operating geographical
regions.
Risk of non-call due to the lack of coupon step-up.
Sustainalytics ESG risk rating
PUBLIC#
Standard Chartered Bank
About the issuer
Bond structure
Ford Motor Credit 4.125% 2024 (SGD)
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
In Q2 FY21 (ending 30 June 2021), Ford Credit’s adjusted revenue declined 0.9% y/y to USD2.0bn as production
decreased due to semiconductor shortage, which affected originations. However, adjusted operating income increased
2.0x y/y to USD1.6bn, mainly due to favourable operating lease residual performance and a decline in credit loss reserve
owing to lower COVID-19-related losses. As of Q2 FY21, Ford Credit’s loss to receivables ratio improved to -0.1% from
0.2% in Q1 FY21 due to strong credit recoveries.
Incorporated in 1959, Ford Credit is the indirect, wholly owned automotive financial services arm of Ford, which is one of
the largest auto manufacturers with a global market share of 4.9% for Q2 FY21. The two companies are bound by a
Relationship Agreement, whereby Ford Credit can request capital contributions from Ford if its managed leverage level
exceeds 11.5x for a calendar quarter. Ford Credit accounted for roughly 9.7% of Ford’s Q2 FY21 revenue. Ford Motor
Credit generates its revenue primarily by providing vehicle-related financing as well as leasing activities through its network
of dealers. This consists of payments made under retail instalment sales and dealer financing programmes, and also lease
contracts among others. In Q2 FY21, Ford Credit generated 86.9% of its revenue from Americas, while Asia Pacific and
Europe accounted for 9.0% and 4.1% of revenue, respectively. In June 2021, Ford Credit announced its plan to wind down
or sell its operations in Argentina and Brazil.
4.125%
Key bond metrics
Currency SGD
ISIN XS2008854650
Rating (S&P) BB+
Issue Size 300mn
The bond is senior unsecured.
We first initiated the trade on this bond on 31 January 2020. Our
latest recommendation was a BUY on 16 February 2021. Our view
is based on a 12-month investment horizon.
Wealth Management Chief Investment Office | 3 September 2021, 12:45 PM SST
Source: Bloomberg, Standard Chartered
Capital Structure Senior Unsecured
Maturity 20-Jun-2024
Coupon
PUBLIC#
Disclosures
Market Abuse Regulation (MAR) Disclaimer
Country/Market Specific Disclosures
This document is confidential and may also be privileged. If you are not the intended recipient, please destroy all copies and notify the
sender immediately. This document is being distributed for general information only and is subject to the relevant disclaimers available at
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independent research, an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment
strategy, in relation to any securities or other financial instruments. This document is for general evaluation only. It does not take into
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been prepared for any particular person or class of persons. You should not rely on any contents of this document in making any
investment decisions. Before making any investment, you should carefully read the relevant offering documents and seek independent
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into account your specific investment objectives, financial situation or particular needs, before you make a commitment to purchase the
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without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance.
Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion
only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be). This
document must not be forwarded or otherwise made available to any other person without the express written consent of the Standard
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Reference Number ZC18. The Principal Office of the Company is situated in England at 1 Basinghall Avenue, London, EC2V 5DD.
Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
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aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other
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limited liability by Royal Charter 1853 Reference Number ZC18.The Principal Office of the Company is situated in England at 1 Basinghall
Avenue, London, EC2V 5DD.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
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This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.
Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
Prudential Regulation Authority. Standard Chartered Bank, Dubai International Financial Centre having its offices at Dubai International
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meaning of UAE Securities and Commodities Authority Decision No. 48/r of 2008 concerning financial consultation and financial analysis.
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Standard Chartered Bank Zambia Plc, a company incorporated in Zambia and registered as a commercial bank and licensed by the Bank
of Zambia under the Banking and Financial Services Act Chapter 387 of the Laws of Zambia.
This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures
Appendix.