Aspial to roll out 5-year 5.25% retail bonds

SINGAPORE - Aspial Corporation announced its five-year, S$75 million bonds to the retail market on Tuesday (Aug 18), in a bid to raise funds for financing and investment needs.

The bonds, issued by Aspial's subsidiary Aspial Treasury, offer a coupon rate of 5.25 per cent annually - highest among local retail bonds available now.The issuance aims to raise net proceeds of around S$72.8 million.

Despite their attractive returns, analysts cautioned that the value of retail bonds will be pressured when the expected interest rate hike sets in.

The application for Aspial's bonds will start at 9.00 am tomorrow and will end at 12 noon on August 26. The bonds are then expected to be issued on August 28, with trading set to start on August 31 on the Mainboard. DBS is the sole bookrunner for the offer.

Retail subscription is capped at a minimum of S$2,000, and interest will be paid on February 28 and August 28 every year.

The offer by Aspial came after Frasers Centrepoint Limited's S$500 million issuance in May, which offers a coupon rate of 3.65 per cent over a seven-year tenure. Before FCL's issuance, Genting Singapore rolled out its bonds with a 5.125 per cent coupon rate in 2012.

Aspial's offered rate is "wonderfully attractive" on paper, but investors should beware of the uncertain interest rate outlook, CMC Markets analyst Nicholas Teo said.

"Bond value is determined by two things - the local interbank offered rates and the Federal Reserve rates. After years of low interest rate environment, investors are still intoxicated by high bond yields, but when the Fed raises the rates, they may find their investment getting a hair-cut."

He added that the retail fixed income market is more attracted to the upcoming Singapore Savings Bonds due to its flexibility and risk-free nature.

But Aspial is not worried about timing and demand.

A spokesperson said: "Aspial's bond offering enables us to widen our sources of fundraising and diversify our investor base to include retail investors, giving them the opportunity to own a stake in a homegrown company.

"We believe retail bonds and the SSB both provide alternative investment options for retail investors. We think both will be welcomed by retail investors in Singapore, who are sophisticated in their investment objectives."