Updates on FCL Treasury 3.65% Retail Bond

Hi everyone,

Just an update on the FCL Treasury 3.65% 7 year Retail Bond.

• Price on 29th May 2015 = S$1.007
• Interest = S$0.0365 per share
• Yield = 3.625%

Investment till Callable Date

• Tenure = 7 years
• Total Interest = $0.2555 per share
• Capital Loss = $0.007
• Transaction Cost = $0.006
• Overall Return = $0.2446
• Overall Annual Yield = 3.440%

In my previous post, I have mention that it either follows the yield that is closer to Genting SP5.125% or CapitaMall 3.08% Retail Bond which means the price ranges from $0.98 to $1.04. Well the price seems now to hover just right between them at $1.007.

This is something which I don't really understand because FCL Treasury has the backing of Fraser Centrepoint which is by far one of the household blue chips that we know. Thus, there should be a premium attached to it. However, as of now, it is not moving up as much.

Well, there seems to have a competition of funds at this point with FCL Treasury rivaling Hyflux CPS 6% and OCC 5.1% all which has a shorter tenure and giving at least 3% yield and therefore look more attractive.

I have gotten 10 lots from this and will hold on to it at least until next year. It serves as part of my family cash reserve which I am trying to build.

Frasers Centrepoint raising S$200m from bond issue - Channel NewsAsia

Frasers Centrepoint raising S$200m from bond issue - Channel NewsAsia

This is one retail bond which is going to be listed... Finally there is one which we can look into.

• IPO price on 17th May 2015 = S$1.00
• Interest = S$0.0365 per share
• Yield = 3.65%

Investment till Callable Date

• Tenure = 7 years
• Total Interest = $0.2555 per share
• Capital Loss = $0.00
• Transaction Cost = $0.006
• Overall Return = $0.2495
• Overall Annual Yield = 3.564%

Fraser Centrepoint is now raising a new 7 year bond with a coupon of 3.65%. On paper, the published yield seems ok but if you look at investment till callable date, you would realize that it is by far even better than Hyflux 6% CPS preference shares because if you get it at IPO and hold it until maturity, you are not going to lose any capital. For Hyflux, you are still going to lose capital because you are buying at a premium.

There is another bond, Genting SP 5.125% Perp bond which has almost the same maturity as FCL (provided they redeem their bonds) and it is currently having an overall annual yield of 4.062%. Another is CapitaMall Trust 3.08% bond yielding at an overall annual yield of 2.707% maturing one year lesser. Thus, there is quite a number to compare. I would say that the yield is going to be closer than CapitaMall Trust than Genting SP as FCL and CapitaMall Trust are both property related (although one is a developer and another is a REIT)

I have applied for 10 lots and hoping to get some. If I am right than the yield is going to be closer to CapitMall Trust 3.08%, price will go up to about $1.04 at listing. If I am wrong and it is closer to Genting SP 5.125% Perp, the price will go down to $0.98. It is really a 50-50 and I think it is going up. If it really went down, I will buy more on the market.