Wednesday, May 18, 2016

New Hyflux 6% Perps?

Woke up today to see that headline. Hey, deja vu. Doesn't Hyflux already have 6% issues outstanding?

Oh wait, that is a preference share, as opposed to the NC3 Perp bonds that they sold in 2014 at 5.75%.

And right after that they sold NC2 Perp bonds at 4.8%.

Now they are looking to sell NC5 Perp bonds at 6%, in order to redeem it's NC2 Perp bonds. That makes sense, since the NC2 Perps go up 2% this year if they don't get redeemed.

Tradehaven writes well on these issues:
2014 NC3
2014 NC2
2014 NC5

Personally, I like the idea of perpetuals. Sounds very nice and comforting, especially for the investor that likes to "purchase income streams". However, I'm just not very sold on Hyflux.

Investing in debt and in equity are 2 different things, which I am not sure most investors understand.

At 60% debt to assets, a very ugly and underperforming stock, 5 year stagnant revenues and declining profit, it doesn't seem to me like it would be a good bet that Hyflux is going to have the ability to pay me back my own money which I lent them without going bust. It's not like they are using their debt / assets well to generate more profits.

Now they are borrowing money to pay back borrowings. Not even going to think much about it.

If you are vested, its a good thing if they can raise money to pay back their debt, since it gets more expensive if it doesn't get repaid. If you're not vested, I would implore you to find some good reasons to get yourself involved in this mess. I can't find any, other than a 6% yield, which is meaningless if you only get paid for a few years and lose the principal.

To me, it's a no no. I'm staying away and I'm just going to watch this show.

Will this subscription yet again becomes oversubscribed by the retail horde? I'm counting on you, aunties and uncles.


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  2. i m glad i read your blog before plonking my $ down .. thanks for heads up ..
    one of the aunties

  3. i m glad i read your blog before plonking my $ down .. thanks for heads up ..
    one of the aunties

  4. well played sir


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