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Singapore Corporate Bond New Issue: GEO Energy 3.5 Years 7% and PIL 3 Years 6.25%

Bonds, Investments

Written by:

Dr Wealth

  • Issuer: New Geo Energy
  • Initial Price Talk: Low 7%
  • Size to be determined

geo energy

SGD 300 mio borrowing programme.

Market Cap : SGD 341 mio. IPO back in Oct 2012.

Obama is not a friend of the coal industry and investors are running shy of coal after his recent EPA (Environmental Protection Agency) proposal to reduce emissions of coal-fired power plants. Thus coal bonds are the worst performers in the bond market year to date as a Bloomberg article noted that the only bonds that lost money this year are junk rated coal producers.

img coal futures 8-7-14

 

Coal Futures – Source: Bloomberg

There is little to comment about the little covered and largely insider owned (37.85% held by public) Geo Energy, with a decent set of accounts and operating in profit zone, unlike the huge negative publicity we have been getting on Bumi Resources and the dirty, physically and operationally, business of coal and misappropriations as reported in the news.

Interesting to note that Jim Rogers has a minority stake of 0.15% in the company, as a company director, and may increase his stake in the company at some point in the future with a little note in their shareholding about a 2,000,000 or so call option.

I am not a big fan of coal but at a coupon of low 7% and a huge PB rebate/commission for selling this stuff, I expect the bonds to go quite quickly.

Comparables :

  • Kris Energy 6.25% 06/2017 102.55/102.80 5.29/5.2%
  • Trikomsel 7.875% 06/2017 100/100.50 7.875/7.68%

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PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED SGD 3 YR ISSUE

  • ISSUER: Pacific International Lines (Private) Limited
  • SERIES: 001
  • STATUS: Direct, unconditional, unsubordinated and unsecured
  • RATING: Unrated
  • FORMAT: Reg S, S274 & 275 of SFA, issuance off S$1 billion Multicurrency Medium Term Note Programme
  • TENOR: 3 years
  • INITIAL PRICE GUIDANCE: 6.250% to 6.375%
  • ISSUE SIZE: TBD
  • REDEMPTION UPON CHANGE OF CONTROL: At 101%, in accordance with the Programme
  • REDEMPTION FOR TAXATION REASONS: Yes, in accordance with the Programme
  • PAYMENT: Semi-annual, actual/365 (fixed)
  • DETAILS: SGD250K/Medium Term Note Programme/Singapore Law/CDP
  • LISTING: SGX-ST

Credit highlights for PIL below:

  • Pacific International Lines (Private) Ltd is a leading container liner and multi-purpose service provider with over 47 years track record. Core businesses include shipping (~69% of FY13 revenue), container manufacturing (~28% of FY13 revenue) and other businesses such as logistics (~3% of FY13 revenue).
  • The group has established leadership positions in markets with barriers to entry. The group is the 16th largest containership operator globally, with 177 owned/operated vessels, with global coverage to more than 500 locations in about 100 countries. Singamas is the 2nd largest container manufacturer with ~21% estimated global market share.
  • Focused on growing emerging markets, the group is a top 3 carrier from Asia to West Africa (~14% capacity market share from Far East to West Africa) and a leading carrier in the Red Sea Region, with extensive network in Saudi Arabia, Jordan, Egypt, Yemen, Sudan, Djibouti, Ethiopia, Eritrea and Somalia
  • The group has a modern fleet with relatively low average age of owned vessels compared to industry, and a strategically optimized mix of chartered and owned vessels to allow for flexibility to adapt in both favourable and adverse market conditions.
  • The group operates a vertically integrated business with a diverse, blue chip customer base.

Comments :

PIL is a familiar name if you drive down Singapore’s central business district with their building right in the heart of town.

Being a privately owned company, the public has little access to their financial statements which cannot be found on their website and their only listed subsidiary is Singamas HK (716 HK).

I am not a big fan of coal but at a coupon of low 7% and a huge PB rebate/commission for selling this stuff, I expect the bonds to go quite quickly.

Comparables :

  • Kris Energy 6.25% 06/2017 102.55/102.80 5.29/5.2%
  • Trikomsel 7.875% 06/2017 100/100.50 7.875/7.68%

******************

PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED SGD 3 YR ISSUE

  • ISSUER: Pacific International Lines (Private) Limited
  • SERIES: 001
  • STATUS: Direct, unconditional, unsubordinated and unsecured
  • RATING: Unrated
  • FORMAT: Reg S, S274 & 275 of SFA, issuance off S$1 billion Multicurrency Medium Term Note Programme
  • TENOR: 3 years
  • INITIAL PRICE GUIDANCE: 6.250% to 6.375%
  • ISSUE SIZE: TBD
  • REDEMPTION UPON CHANGE OF CONTROL: At 101%, in accordance with the Programme
  • REDEMPTION FOR TAXATION REASONS: Yes, in accordance with the Programme
  • PAYMENT: Semi-annual, actual/365 (fixed)
  • DETAILS: SGD250K/Medium Term Note Programme/Singapore Law/CDP
  • LISTING: SGX-ST

Credit highlights for PIL below:

  • Pacific International Lines (Private) Ltd is a leading container liner and multi-purpose service provider with over 47 years track record. Core businesses include shipping (~69% of FY13 revenue), container manufacturing (~28% of FY13 revenue) and other businesses such as logistics (~3% of FY13 revenue).
  • The group has established leadership positions in markets with barriers to entry. The group is the 16th largest containership operator globally, with 177 owned/operated vessels, with global coverage to more than 500 locations in about 100 countries. Singamas is the 2nd largest container manufacturer with ~21% estimated global market share.
  • Focused on growing emerging markets, the group is a top 3 carrier from Asia to West Africa (~14% capacity market share from Far East to West Africa) and a leading carrier in the Red Sea Region, with extensive network in Saudi Arabia, Jordan, Egypt, Yemen, Sudan, Djibouti, Ethiopia, Eritrea and Somalia
  • The group has a modern fleet with relatively low average age of owned vessels compared to industry, and a strategically optimized mix of chartered and owned vessels to allow for flexibility to adapt in both favourable and adverse market conditions.
  • The group operates a vertically integrated business with a diverse, blue chip customer base.

Comments :

PIL is a familiar name if you drive down Singapore’s central business district with their building right in the heart of town.

Being a privately owned company, the public has little access to their financial statements which cannot be found on their website and their only listed subsidiary is Singamas HK (716 HK).

As a bond buyer, the risks are 1. company as a going concern (for the next 3 years) and 2. the probability of new debt issues that will undercut the prices of old debt.

Both I see as low and thus PIL should be a sell out and it would not be a bad idea to dump some Swibers and Vallianz for it too.

img coal futures 8-7-14

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