Astrea 8 bonds

[limster]

There is one hardcore Astrea supporter called limster that keep sorta of shoot down other posts when ppl say bad about Astrea bonds. I have said Hyflux much earlier. The more he protect the more we know he dump quite a bit inside and it works becuz previous tranche no issues earn monies and laughs to the bank. His monies his choice and I wish him more years of monies to earn from Astrea bonds.

I am happy if people spread fear about Astrea bonds so that I can get higher allocation at IPO. If people continue to spread fear, hopefully the price will drop below IPO price and I can buy more on secondary market.

Like I mentioned previously, I loaded up on A6 on the secondary market when yields were 5% (as shown in screenshot above) and A6 price dropped below IPO price! When my A6 matures, I'll need to find something to rollover into, and I hope A8 drops in price!

My objection is that people try to spread fear through misinformation rather than facts. If you had a better understanding of the structure of Astrea vs Hyflux perps vs Lehmann minibonds, you would realise they are not comparable.

I did not invest in Lehmann minibonds and I certainly did not invest in Hyflux perps, but I invested in A4-A8, because I can tell the difference. If you can't tell the difference, then yes, everything looks like a Hyflux perp or Lehmann minibond


For an example of accurate reporting of Astrea's downsides and risks, BBCWatcher's post are usually factually accurate.

 

[BBCWatcher]

The loss of credibility for Temasek would be worth more than the value of the bond itself.

Oh, I really disagree with you. So do investors, who are generally not so naive. Just look at the yield!

By that "logic" every time somebody has a bad experience in a retail establishment in a CapitaLand Group or Mapletree Investments building Temasek will come riding to the rescue. (Temasek happens to own 100% of CapitaLand Group and Mapletree Investments.) Sorry, it just doesn't work that way. As investors obviously know already. What part of 4.35% p.a. is so complicated?

For the record, I'm not predicting that Azalea will fail to keep its promises with respect to the Astrea 8 securities. The odds are in favor of 4.35% (Class A-1) p.a. being paid(*), and a call at the 5 year mark. Let's assume Fitch has assigned a proper letter grade. Fitch has placed its full report behind a paywall, but if it's A+(sf) (for class A-1) then it's probably about a 0.05% chance of default within 1 year and about 1% within 10 years, give or take. At least 99 times out of 100 this should work, if Fitch is correct and if I'm interpreting their public information correctly. Of course there's a chance it won't work.

(*) I'm not trying to suggest that Class A-2 won't be paid here. Class A-2 is probably more like 0.07% default risk within 1 year and 1.60% within 10 years, give or take. It has a 6 year call, so it has to run a year longer on that higher risk curve.

 

[fr33d0m]

Oh, I really disagree with you. So do investors, who are generally not so naive. Just look at the yield!

By that "logic" every time somebody has a bad experience in a retail establishment in a CapitaLand Group or Mapletree Investments building Temasek will come riding to the rescue. (Temasek happens to own 100% of CapitaLand Group and Mapletree Investments.) Sorry, it just doesn't work that way. As investors obviously know already. What part of 4.35% p.a. is so complicated?

which bond is issued by CapitaLand Group or Mapletree Investments directly? Have they defaulted so far?

What does 4.35% have to do with the default? US government is unlikely to default on short term T-Bill, it still pays 5%.

 

[BBCWatcher]

My objection is that people try to spread fear through misinformation rather than facts. If you had a better understanding of the structure of Astrea vs Hyflux perps vs Lehmann minibonds, you would realise they are not comparable.

I agree with you that Hyflux's perpetual bonds are not at all comparable to the Astrea series of securities.

I'm a little more nuanced when it comes to Lehman. Lehman Brothers issued a variety of securities in Singapore in several tranches and under different names. According to this National Library Board article there were the Minibond Notes (in 9 series), High Notes 5, Jubilee Series 3 LinkEarner Notes, and the Pinnacle Series 9 and 10 Notes — a total of at least 13 different securities. (The NLB cites a MAS report for that information, although unfortunately the original MAS report isn't loading for me.) As an important aside, this other article mentions that Temasek was a reference entity for the Pinnacle Notes. They still blew up, and those investors lost a lot. Temasek is still around.

While these Lehman-issued securities aren't directly comparable to the Astrea series, I don't think they're incomparable. They were priced with similar spreads ("enticing" but not too unbelievable), they had similar quality representations, and they were structured products with diverse underlying holdings of rather good quality. Lehman itself had an excellent pre-Global Financial Crisis credit rating, and practically everyone thought they were an excellent, high quality counterparty and underwriter. Even probably "too big to fail," that U.S. regulators wouldn't dare let Lehman collapse. But the rating agencies were fundamentally wrong, mostly because they were paid (off) to be wrong. And the Global Financial Crisis actually happened, the set of events that were supposed to be far out in the long tail distribution of risks. So they blew up, and those investors took big losses.

....But I'm going to assume Fitch is at least "close enough" in their rating of Astrea 8. Investors can decide whether a circa 0.70% (Class A-1 by call) or circa 1.20% (Class A-2 by call) default risk is worth taking for the promised yield. (Assuming these securities are appropriate for their particular financial goals, which I think is the bigger hurdle for most people. I think they're an awkward fit for most retail investors' financial goals.) Those default risk figures might not be exact, but they're something like that, I think (and Fitch thinks if I understand them correctly).

For an example of accurate reporting of Astrea's downsides and risks, BBCWatcher's post are usually factually accurate.

Thanks, I try.

 

[BBCWatcher]

which bond is issued by CapitaLand Group or Mapletree Investments directly? Have they defaulted so far?

See my most recent post about the Lehman "Pinnacle" securities. Temasek's good name was more attached. And many other good names. They still blew up, and Temasek is still around.

Both CapitaLand Group and Mapletree Investments have very complicated corporate organizations with subsidiaries and affiliates. They organize themselves this way in large part precisely to compartmentalize financial and legal risks. And most investors understand these realities and associated perils.

Azalea structures the Astrea series of securities as standalone risk/investment vehicles. Whatever happens in Astrea 8 (for example) has no bearing on Astrea 7's performance, or vice versa. If Astrea 7 goes pear shaped the Astrea 8 investors won't bail them out, or vice versa. By design.

What does 4.35% have to do with the default? US government is unlikely to default on short term T-Bill, it still pays 5%.

Surely you know those are different currency promises and tenors.

You can believe whatever you want to believe. But most investors fully understand that a security that promises 4.35% p.a. (and a 5 year call if conditions are met) involves materially higher risk than a 5 year Singapore Government Security paying 3.04% (closing yield on Friday).

 

[chiokcc]

No one compares with Hyflux Preference shares?

I am still bleeding from Hyflux P shares ..... and come to think electricity price went up after Hyflux incident ....

really wrong timing ......

 

[fr33d0m]

See my most recent post about the Lehman "Pinnacle" securities. Temasek's good name was more attached. And many other good names. They still blew up, and Temasek is still around.

Both CapitaLand Group and Mapletree Investments have very complicated corporate organizations with subsidiaries and affiliates. They organize themselves this way in large part precisely to compartmentalize financial and legal risks. And most investors understand these realities and associated perils.

Surely you know those are different currency promises and tenors.

You can believe whatever you want to believe. But most investors fully understand that a security that promises 4.35% p.a. (and a 5 year call if conditions are met) involves materially higher risk than a 5 year Singapore Government Security paying 3.04% (closing yield on Friday).

LOL. Please go ahead and believe whatever you want.

The backlash from this bond default has significant impact on Temasek's overall PE strategy. It has built up Astrea as a platform. The platform alone will have higher value than this bond alone.

 

[BBCWatcher]

I am still bleeding from Hyflux P shares ..... and come to think electricity price went up after Hyflux incident ....
really wrong timing ......

I'm so sorry. But as long as you've learned the right lessons and apply them going forward, you're doing the best you can. FWIW I've had a couple investments fall to zero. It's not fun.

The backlash from this bond default has significant impact on Temasek's overall PE strategy. It has built up Astrea as a platform. The platform alone will have higher value than this bond alone.

I completely disagree with you. Azalea has structured each individual Astrea security as completely separate, and Temasek has zero involvement except that it happens to own Azalea. Temasek did not serve me bad sushi at a CapitaLand mall. CapitaLand didn't even do that, nor any of its subsidiaries. I know better, and so does every reasonably sensible person.

 

[chiokcc]

I'm so sorry. But as long as you've learned the right lessons and apply them going forward, you're doing the best you can. FWIW I've had a couple investments fall to zero. It's not fun.

Only consolation is that I did not borrow $$$ to buy, and I am still years to my official retirement age .....

 

[limster]

While these Lehman-issued securities aren't directly comparable to the Astrea series, I don't think they're incomparable.

I'll grant that minibonds are somewhat "comparable" to Astrea than Hyflux perps which are worlds apart.

But the main feature of the minibond which was the immediate trigger (though default might have been inevitable anyway) - Lehmann's bankruptcy.

Lehmann as the swap counterparty means the minibond was more of a credit linked note rather than a pure collateralised debt obligation (CDO) (even if were there CDOs at the end of the maze).

If minibond were a 'pure' CDO, then it would have similarities to Astrea, which is a CFO.

 

[BBCWatcher]

But the main feature of the minibond which was the immediate trigger (though default might have been inevitable anyway) - Lehmann's bankruptcy.

All of these securities are complicated, though. In hindsight that clause seems perilous. But at the time it seemed fairly innocuous even to the pros.

On edit: For perspective, S&P (in)famously assigned Lehman an "A" credit rating 6 days before the company went bankrupt.

Lehmann as the swap counterparty means the minibond was more of a credit linked note rather than a pure collateralised debt obligation (CDO) (even if were there CDOs at the end of the maze).

Yup.

If minibond were a 'pure' CDO, then it would have similarities to Astrea, which is a CFO.

Agreed. But there's a chance some other clause or condition blows up. Unfortunately these are not simple products.

 

[sky1978]

I'm a little more nuanced when it comes to Lehman. Lehman Brothers issued a variety of securities in Singapore in several tranches and under different names. According to this National Library Board article there were the Minibond Notes (in 9 series), High Notes 5, Jubilee Series 3 LinkEarner Notes, and the Pinnacle Series 9 and 10 Notes — a total of at least 13 different securities. (The NLB cites a MAS report for that information, although unfortunately the original MAS report isn't loading for me.) As an important aside, this other article mentions that Temasek was a reference entity for the Pinnacle Notes. They still blew up, and those investors lost a lot. Temasek is still around.

There is an MAS investigation report in the below link.
https://www.mas.gov.sg/-/media/MAS/...hash=07AF4C80B257CF40A3FBF81AF0138C874BF75D04

Those Pinnacle notes are bets on not having more than a certain number of reference entities (among the 100 to 150 list) going into default. Buyers of the notes are more attuned to participants in selling credit default swaps, and the list was structured to have 100 to 150 entities.

The backlash from this bond default has significant impact on Temasek's overall PE strategy. It has built up Astrea as a platform. The platform alone will have higher value than this bond alone.

It is a clever way for them to extract liquidity from otherwise illiquid PE investments. Debt funding is always cheaper than the cost of equity.

I'll grant that minibonds are somewhat "comparable" to Astrea than Hyflux perps which are worlds apart.

It is not comparable. Minibond products are closer to credit default swap instruments. Minibond holders can lose everything when certain numbers of reference entities enter default status. I don't think that is the case for Astrea bonds. There is still a sizeable equity buffer ahead of the bonds to absorb losses, but that was not the case with minibonds.

Astrea bonds are like someone investing billions in PE investments and want to extract liquidity or build additional leverage from them. So, they now pool those investments as collateral and get debt funding based on those assets. In layman's terms, it is closer to share or margin financing, and now the bondholders are the financers. The main difference is that those investments are not liquid because they are not listed yet.

It is not that complicated if one understands the essence of those transactions.

Mini-bond = x number of reference entities default, loss 100% capital
Astrea = Bondholders are acting as lenders in a share or margin financing scenario
Hyflux perp/pref share = The holders are investing in a piece of paper that is ranked only higher than equity shares for a 6% return.

 

[sohguanh]

I am happy if people spread fear about Astrea bonds so that I can get higher allocation at IPO. If people continue to spread fear, hopefully the price will drop below IPO price and I can buy more on secondary market.

Like I mentioned previously, I loaded up on A6 on the secondary market when yields were 5% (as shown in screenshot above) and A6 price dropped below IPO price! When my A6 matures, I'll need to find something to rollover into, and I hope A8 drops in price!

My objection is that people try to spread fear through misinformation rather than facts. If you had a better understanding of the structure of Astrea vs Hyflux perps vs Lehmann minibonds, you would realise they are not comparable.

I did not invest in Lehmann minibonds and I certainly did not invest in Hyflux perps, but I invested in A4-A8, because I can tell the difference. If you can't tell the difference, then yes, everything looks like a Hyflux perp or Lehmann minibond


For an example of accurate reporting of Astrea's downsides and risks, BBCWatcher's post are usually factually accurate.

Again this is a forum you can post what you like once a while will be another reader will post again. Happy replying see your such long reply you are indeed a hardcore Astrea bond customer no denying that

 

[fr33d0m]

It is not comparable. Minibond products are closer to credit default swap instruments. Minibond holders can lose everything when certain numbers of reference entities enter default status. I don't think that is the case for Astrea bonds. There is still a sizeable equity buffer ahead of the bonds to absorb losses, but that was not the case with minibonds.

Astrea bonds are like someone investing billions in PE investments and want to extract liquidity or build additional leverage from them. So, they now pool those investments as collateral and get debt funding based on those assets. In layman's terms, it is closer to share or margin financing, and now the bondholders are the financers. The main difference is that those investments are not liquid because they are not listed yet.

This is about right. all these CDOs CXOs, it is not only about the structure, more importantly, what's the underlying assets.

For the minibond, the underlying assets is CDS or something like CDS. When default started, those CDS went to 0.

For most if not all A1 of non-subprime MBS backed CDOs, there was hardly any loss.

 

[bruiser69]

Heng me no touch Hyflux perps nor Lehman minibonds

 

[vsvs24]

I am thankful still have Astrea retail bonds.

In the good old days, I could hold many retail bonds issued by DBS, OCBC, UOB, Capitaland, Frasers, SIA, LTA, HDB.

These entities are still issuing bonds but not to retail investors anymore but to accredited investors for min $250,000.

Now only Astrea and Frasers are kind enough to issue retail bonds.

So sad that even our government ministries and statutory board don't give us chance to participate.

Even the green bond is issued for 50 years which retail investors will avoid.


Below are some examples of recent SMS received from FSMone.

SMS on 16.07.2024 :
FSMOne<NEW BOND>
Issuer: HDB
Final Price:3.244%
Tenure:2yrs
Min Amt:SGD250,000
Coupon Freq:SemiAnnual
*FOR AI ONLY*

SMS on 03.07.2024 :
FSMOne<NEW BOND>
Guarantor: CapitaLand Integrated Commercial Trust
Price Guide: 3.85% area
Tenure: 10 years
Min Amt: SGD250,000
Coupon Freq: SemiAnnual
FOR AI ONLY

SMS on 19.06.2024
FSMOne<NEW BOND>
Guarantor: CapitaLand Group
Price Guide:4%area
Tenure:7yr
Min Amt:SGD250,000
Coupon Freq:SemiAnnual
*FOR AI ONLY*

 

[fr33d0m]

The bonds from government entities are not so different from the various SGS whether newly issued or reopened.

 

[BBCWatcher]

I am thankful still have Astrea retail bonds.

In the good old days, I could hold many retail bonds issued by DBS, OCBC, UOB, Capitaland, Frasers, SIA, LTA, HDB.

These entities are still issuing bonds but not to retail investors anymore but to accredited investors for min $250,000.

Now only Astrea and Frasers are kind enough to issue retail bonds.

But there’s an excellent market response: lower cost bond funds, notably MBH. You can invest as little as S$100 in MBH (via RSPs anyway), it’s very liquid, and you effectively get pieces of a basket of quality screened bonds. What’s not to like?

 

[DevilPlate]

I am thankful still have Astrea retail bonds.

In the good old days, I could hold many retail bonds issued by DBS, OCBC, UOB, Capitaland, Frasers, SIA, LTA, HDB.

These entities are still issuing bonds but not to retail investors anymore but to accredited investors for min $250,000.

Now only Astrea and Frasers are kind enough to issue retail bonds.

So sad that even our government ministries and statutory board don't give us chance to participate.

Even the green bond is issued for 50 years which retail investors will avoid.


Below are some examples of recent SMS received from FSMone.

SMS on 16.07.2024 :
FSMOne<NEW BOND>
Issuer: HDB
Final Price:3.244%
Tenure:2yrs
Min Amt:SGD250,000
Coupon Freq:SemiAnnual
*FOR AI ONLY*

SMS on 03.07.2024 :
FSMOne<NEW BOND>
Guarantor: CapitaLand Integrated Commercial Trust
Price Guide: 3.85% area
Tenure: 10 years
Min Amt: SGD250,000
Coupon Freq: SemiAnnual
FOR AI ONLY

SMS on 19.06.2024
FSMOne<NEW BOND>
Guarantor: CapitaLand Group
Price Guide:4%area
Tenure:7yr
Min Amt:SGD250,000
Coupon Freq:SemiAnnual
*FOR AI ONLY*

Thats why retail not much choices other than MBH

i managed to grab some 5/10y SGS in recent months

 

[DevilPlate]

But there’s an excellent market response: lower cost bond funds, notably MBH. You can invest as little as S$100 in MBH (via RSPs anyway), it’s very liquid, and you effectively get pieces of a basket of quality screened bonds. What’s not to like?

But some of us prefer to have fixed maturity dated bonds…..js hold to maturity get back our principle regardless of prevailing market interest rate