Corporate bonds charges

[sgdividends]

Hi,

Fundsupermart charges
1) 0.35% buy and 0.35% sell on nominal value of bond

2) 0.05% per quarter on market value of bond

3) no LTV

My first time buying corporate bonds and just want to ask in terms of charges is it excessive before I compare with my banker who obviously wants to eat my carrot head .

Using it as a base case.

Enough of being cheated all my life!!!

 

[OngHuatHuat]

The most important factor:
Price.

Same corporate bond, same time, different platform can offer different price. As far as I know, fund supermart is one of those that offer more transparent and lower pricing.
Other charges are kind of insignificant compared to price difference. In mandarin, we call some brokerage firms吃水很深。

 

[neanea]

What bond you bought?

Hi,

Fundsupermart charges
1) 0.35% buy and 0.35% sell on nominal value of bond

2) 0.05% per quarter on market value of bond

3) no LTV

My first time buying corporate bonds and just want to ask in terms of charges is it excessive before I compare with my banker who obviously wants to eat my carrot head .

Using it as a base case.

Enough of being cheated all my life!!!

 

[sgdividends]

The most important factor:
Price.

Same corporate bond, same time, different platform can offer different price. As far as I know, fund supermart is one of those that offer more transparent and lower pricing.
Other charges are kind of insignificant compared to price difference. In mandarin, we call some brokerage firms吃水很深。

Understand what u mean.

I'm going to take the price from fundsupermart as a guage.

Fundsupermart doesn't have a way to loan so quite a wet blanket

 

[sgdividends]

What bond you bought?

I'm looking at centurion 2020 5.xx% coupon.

Ytm ask 5.8x%. Ytw ask 4.Xx%

Still deciding..

Actually, I wonder where bloomberg takes its price or fundsupermart takes it price as it's OTC and there is no exchange for it...

 

[alocacoc]

Sales charge 0.25 both ways
Waive off all other charges

 

[sgdividends]

Sales charge 0.25 both ways
Waive off all other charges

Which bank is this, may I ask?

U mean buy and sell commission is 0.25% each way right?

 

[alocacoc]

Which bank is this, may I ask?
pm
U mean buy and sell commission is 0.25% each way right?

yup correct

 

[limpoop]

Which bank is this, may I ask?

U mean buy and sell commission is 0.25% each way right?

I use Kayhian and they charged 0.25% to buy or sell.

For banks most will just quote you a price that is inclusive of the commissions.

Normally I will ask Kayhian & banks to quote and will buy/sell from the best quotes

 

[sgdividends]

I use Kayhian and they charged 0.25% to buy or sell.

For banks most will just quote you a price that is inclusive of the commissions.

Normally I will ask Kayhian & banks to quote and will buy/sell from the best quotes

Thanks Limpoop.
I checked around ..Yeah 0.25% seems like the usual price.

Fundsupermart is actually quite ex

 

[tiertime]

Sales charge 0.25 both ways
Waive off all other charges

I use Kayhian and they charged 0.25% to buy or sell.

For banks most will just quote you a price that is inclusive of the commissions.

Normally I will ask Kayhian & banks to quote and will buy/sell from the best quotes

Thanks Limpoop.
I checked around ..Yeah 0.25% seems like the usual price.

Fundsupermart is actually quite ex

i check Fundsupermart commision at 0.35% (i think).... is KayHian charging lowest for buying/selling?

 

[sgdividends]

i check Fundsupermart commision at 0.35% (i think).... is KayHian charging lowest for buying/selling?

Seems like 0.25 % each leg is the best one can find in the market.

 

[limpoop]

Just sharing my recent experience of buying STARHUB SGD PERP NC5 3.95% bonds from broker and local banks:

Broker: $100 + 0.25% + transfer to CDP

Bank A: $101 All-in + Free custody

Bank B: Put your own bid from $100 (I put $100.15) + Free custody

Bank C: No reply (Either RM was lazy or not interested as I am a very small player)

At the end I did not get anything.

Please share your experience!

 

[homer123]

Forget about buying Corporate bonds in Spore.. too much transaction cost and not much choice. I rather buy US Corporate bond using IB.. Higher yield for the same rating ,only cost bet $10 to $20 commission and you can buy in smaller lot ($1000 and above)

 

[limpoop]

No wonder I cannot even get a single lot of bonds allocated! This guy put 5 lots ($1.25M) also cannot get!

http://www.straitstimes.com/forum/letters-in-print/make-corporate-bond-sales-open-and-fair



Lately, there have been a number of corporate bond sales, with a few issues oversubscribed.

Normally, the bank that is handling the sales for the issuers will inform its clients in the morning and the applications close at about 3pm.

For corporate bonds issued by a renowned company, the bank clients will have to apply for more lots in order to have a chance of getting just one lot.

As the application progresses in the day, the book runner will know the size of applications and clients are expected to put in more lots.

This artificially bumps up the subscription size, creating a bubble, as cash is paid only upon successful allocation.

For instance, the StarHub bond issued recently had an order book of $1.7 billion for a deal size of $200 million.

The bank had advised me to put in five lots, with each of them costing $250,000. Even then, I was not allocated any. The bank told me the minimum number of lots clients have to put in was eight.

The whole process is not open and transparent. It would have been fairer if the bank follows the same allocation process as a share initial public offering (IPO).

In a share IPO, those who apply must have the cash in their banks. Allocation is based on the number of lots applied for and in a certain ratio.

In this way, clients who are given the allotment will be able to honour the payments.

With the current bond allocation, there is a risk of an applicant getting stuck with a few lots if there is a last-minute pullout from bond applicants.

Goh Geok Huat

 

[tmkedmw]

No wonder I cannot even get a single lot of bonds allocated! This guy put 5 lots ($1.25M) also cannot get!

This happens with IPO placement shares during book building as well, bidding millions just to get 100k and the whole process is as transparent as a slab of concrete.

 

[BBCWatcher]

It continues to amaze me that bond and stock issuers keep putting up with this nonsense. These ridiculous costs apply to them as well as they try to raise funds.

 

[limpoop]

This happens with IPO placement shares during book building as well, bidding millions just to get 100k and the whole process is as transparent as a slab of concrete.

What will happen if that guy got all 5 lots allocated but he can only pay for one lot?

 

[sgdividends]

Forget about buying Corporate bonds in Spore.. too much transaction cost and not much choice. I rather buy US Corporate bond using IB.. Higher yield for the same rating ,only cost bet $10 to $20 commission and you can buy in smaller lot ($1000 and above)

Possible to leverage ? If yes , can share the cost?

Also, how about withholding taxes ?

 

[BBCWatcher]

Fun fact: U.S. state and local government bonds are generally U.S. income tax exempt for both U.S. and non-U.S. persons. You can buy these bonds in Exchange Traded Fund (ETF) form if you wish, for example symbol VTEB, which is Vanguard's U.S. municipal bond index fund and which has a total expense ratio of 0.09%.

As of April 30, 2017, VTEB held 3,039 bonds with a total fund value over US$1 billion. The average stated maturity was 13.6 years, and the average duration was 5.9 years. So it's a medium-term bond fund. The yield to maturity was 2.2% and the average coupon was 4.7%. A full 99% of VTEB's bond holdings were rated by agencies, and all the rated bonds were BBB or better. So it's an investment grade bond fund, and rather high quality at that.

This is a U.S. dollar denominated ETF, so there is exchange rate risk to/from Singapore dollars (or any other currency). There are usually broker commissions to buy/sell VTEB on the New York Stock Exchange. VTEB and other U.S. state/local government bond holdings do count toward the U.S. estate tax threshold of US$60,000 that applies to non-U.S. persons.

For those who prefer the Irish domiciled ETFs, Vanguard offers a U.S. dollar corporate bond index fund, symbol VUCP, traded on the London Stock Exchange. Expense ratio is 0.12%. Trading volume looks a little thin to me. VUCP is quoted in British pounds on the exchange, but the bonds themselves are U.S. dollar corporates, so the exchange rate risk will be to the U.S. dollar. VUCP's performance will reflect the 15% U.S.-Ireland treaty tax rate. Because it has an Irish domiciled ETF "wrapper" VUCP should not count toward the U.S. estate tax for non-U.S. persons. VUCP is not recommended for U.S. persons.

Both VTEB and VUCP have principal risk, of course. Specifically, if U.S. market interest rates rise, the share value should fall. Singapore dollar cost averaging is recommended assuming you can manage the transaction costs.