Astrea 8 bonds

[ice_angel]

When buying this on ibanking, even for A-2, can only pay SGD with 1.35 conversion rate? Cannot use pay USD directly?

 

[BBCWatcher]

I am also thinking of getting A-2. When compared to US Treasury Notes, the interest is 1% more.
@BBCWatcher what is your opinion of A-2?

Most people shouldn’t buy any individual stocks or bonds. Common exceptions:

• Employee Stock Purchase Programs (ESPPs) offering a nice discount. But don’t hold these shares longer than required.
• Singapore Savings Bonds, for short-term savings goals and some of your emergency reserve funds.

 

[bruiser69]

hyfulx bonds was safer than the perpetual, which is safet than the preference shares, which is safer than ordinary shares, how much did each group get>

swiber bonds was safer than the ordinary shares, how much did the swiber bond holders get?

the fact is that is astrea were to go down, there is no difference where you are ranked.

my choice of buying ai or a2 would be the currency risk that i will be exposed to. us is cutting rate soon. us$ is expected to drop should they do so. i will evaluate if the 2% extra interest will be able to cover this loss.

I damn heng no buy Hyflux. Many of my collicks then were gloating they were on to a good deal. Some went all in with their bonuses.

 

[hmyoth]

The current FX rate is 1.35 at 6.35% for A-2.
Even if the rate drops to 1.30 or 1.25, the effective returns are still about 5.X% and 4.X%. Still respectable returns.

If drop to 1.3/1.25. HSBC will use the same rate ?

 

[blurpandasg2014]

For clarity, the Astrea 8 securities promise semi-annual coupon payments (every 6 months) until maturity or until call, whichever comes first. The coupons are computed (for the Singapore dollar denominated variant) based on 4.35% p.a. in the initial 5 year period and with a step up rate if the securities are not called. There's a possibility Astrea 8 won't keep these promises.

This series abit fishy. Seems like they won’t be able to redeemed on 5th yr

 

[bruiser69]

This series abit fishy. Seems like they won’t be able to redeemed on 5th yr

Step up 1% then

For me deciding between A-1 or/and A-2 is not the risk involved (rank pari pasu) bur rather the potential FX fluctuations (read depreciation) instead

Skali USD become on par with SGD leh?

 

[limster]

This series abit fishy. Seems like they won’t be able to redeemed on 5th yr

Looks like some people are fearful after reading the usual posts by people who have never invested in the Astrea series, but like to give their comments in every Astrea thread

Actually, I agree (out of self-interest) that people should be fearful of Astrea 8, just like they were fearful of Astrea 4, 5, 6, and 7.

Like I said earlier:

its super risky and yield is terrible. pls don't apply.

 

[DevilPlate]

Anyway prolly can only get 15-20k max for A-1

I have more than that amt in IBIT….money that i can afford to lose all
But if u ask me to whack 100-200k on this astrea….Big No

I whack big amt in SGS instead

 

[sohguanh]

Skali USD become on par with SGD leh?

Above is generic not only apply to Astrea 8. As long as any investment you take SGD and change to USD or other currencies and then later change back you will have that risk. To have peace of mind just stick to SGD A1 don't be greedy and go for A2 which promise a higher interest. But if you don't ever want to change back to SGD then A2 better deal IMHO.

 

[Lè Crayons]

Most people shouldn’t buy any individual stocks or bonds. Common exceptions:

• Employee Stock Purchase Programs (ESPPs) offering a nice discount. But don’t hold these shares longer than required.
• Singapore Savings Bonds, for short-term savings goals and some of your emergency reserve funds.

Interesting thought...

I have some funds not a lot that I can afford to lose. I have been buying US Treasuries in the secondary market for some time and have been getting 5.4% yield.

Should I stick to US Treasuries or try this A-2?

 

[BBCWatcher]

I have some funds not a lot that I can afford to lose. I have been buying US Treasuries in the secondary market for some time and have been getting 5.4% yield.

Should I stick to US Treasuries or try this A-2?

How about neither?

U.S. Treasuries can be a good choice if you have a U.S. dollar spending goal coming up relatively soon. For example, if you’ve got a teenager and want to save up for a Disney World vacation a couple years from now before he starts National Service. Then accumulating some U.S. Treasuries that mature shortly before your planned family vacation in Florida can make some sense.

Otherwise, for long-term investing, most people are better off in low cost bond and stock index funds rather than individual issues. You’ll enjoy whatever long-term returns the overall stock and bond markets deliver, you’ll avoid single stock and single bond issuer risks, and you’ll keep more of your savings working harder for longer — more time in the market. You’ll also enjoy greater liquidity if you ever need it (with respect to most single bonds, which aren’t that liquid). And you can easily rebalance once or twice per year which is fairly important to enhance returns.

 

[dork32]

Then don't buy lor.

which part of my post say dont buy?

i am saying both the series are just as safe or risky.

i am saying i would evaluate my decision based on the returns rather than risk

 

[dork32]

The current FX rate is 1.35 at 6.35% for A-2.
Even if the rate drops to 1.30 or 1.25, the effective returns are still about 5.X% and 4.X%. Still respectable returns.

this is wat i meant. make a decision based on the returns.

but sorry, this is not all to consider. you have to consider the capital loss if the bonds were to be redeemed at usd = 1.25

 

[maumu]

I wish they can allow us to buy A-2 using our existing USD instead of using SGD to convert. my small stash of USD in multiplier account could do with some higher rates instead of deploying into the FD market.

 

[sky1978]

If drop to 1.3/1.25. HSBC will use the same rate ?

They probably already locked in the rate (using forwards) at or close to the time when the offer was launched.

 

[hmyoth]

They probably already locked in the rate (using forwards) at or close to the time when the offer was launched.

I am not referring to the launch rate of 1.35. If 6 years later, the spot rate drop to 1.30, what will be the rate Cdp HsBC use. Still 1.30? We get back 13000 if invested 13500? I guess it is going to be lower than 1.3. Correct me if I m wrong. Anyway I will go for the SGD, USD I still considering . Still got 3 days .

 

[sky1978]

I am not referring to the launch rate of 1.35. If 6 years later, the spot rate drop to 1.30, what will be the rate Cdp HsBC use. Still 1.30? We get back 13000 if invested 13500? I guess it is going to be lower than 1.3. Correct me if I m wrong. Anyway I will go for the SGD, USD I still considering . Still got 3 days .

If you can hedge the rate yourself, the forward rates based on today's interest rate differential of around 1% (USD vs SGD 5-year rate) should be 1.28. This is how the bank's dealer or trading desk priced the forward rates; it does not mean the actual rate will drop to that level in six years; it is a just level with no risk-free arbitrage opportunity.

https://www.omnicalculator.com/finance/interest-rate-parity

If you don't want to take USD risk, buying only SGD and leaving the FX risk to the issuer is always better. The lower rates for SGD are also partly due to the cost of hedging back into SGD for the issuer since their assets are in USD.

 

[final1]

if the USD had actually gone up in the last few days, i bet no one will be talking about this.
Its fixed at 1.35 like it or not and its normal business practice to hedge for something as 'large' as this (US$200m).

1.3424 at the moment. Its a non issue.

 

[spikeling]

To make you guys feel better, Astrea 7B was fixed at 1.3866 2 years ago..

And the exchange rate offered by SGX (HSBC) is not good. About 2% less than the spot rate so far the last 4 times the payout.

 

[DevilPlate]

if the USD had actually gone up in the last few days, i bet no one will be talking about this.
Its fixed at 1.35 like it or not and its normal business practice to hedge for something as 'large' as this (US$200m).

1.3424 at the moment. Its a non issue.

Upon redemption, we cannot choose to receive it in USD right? Sian