SG Bonds Weekly – Week of 20 July 2020 July 20, 2020 205

  • Last week, the performance was mixed both in equities and bonds. Asian investment grade bonds enjoyed higher yield compression compared to Asian high yield bonds.
  • ESR-REIT proposed a merger with Sabana REIT, for a consideration of S$777mn, financed with S$397mn equity and S$460 debt. The combined entity gearing level is expected to be 41.7%.
  • Interest rates and government bond yields have stabilised as markets entered the earnings season both in the US and in Singapore.

 

Outlook for the week

  • Last week, performance was mixed both in equities and bonds, with Asian investment grade bonds seeing higher demand compared to Asian high yield bonds, while tech stocks lost to the Dow and S&P. Interest rates and government bond yields have stabilised as markets enter the earnings season both in the US and in Singapore.

 

Key economic releases for the week

  • Thursday, 23 July 2020: Singapore CPI core YoY
  • Friday, 24 July 2020: Singapore URA private home prices QoQ, Singapore Industrial Production YoY, US Manufacturing PMI

 

Past week: Key events

  • Singapore Advance GDP declined -12.6% YoY, worst than expected. Economist expect upward revisions moving forward as the economy reopens, albeit at at different pace for different sectors.
  • ESR-REIT proposed a merger with Sabana REIT. Concurrent with its earnings announcement, which came in softer with revenue falling 11.5% and operating cashflows declining 6.6%, ESR-REIT announced a merger with Sabana REIT for a consideration of S$777mn, financed with S$397mn equity and S$460 debt. The combined entity gearing level is expected to be 41.7%.
  • Soilbuild Business Space REIT announced its 2Q results, with occupancy increasing QoQ from 84.7% to 89.5% and revenues 3.2% higher YoY. Gearing ratio decreased from 38.5% to 36.9% QoQ.

 

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Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers credit analysis of local and foreign bonds. Previously an equity dealer, he handled equity trade execution and portfolio management. He has presented seminars for organisations such as SIAS, SPH and IRAS, commentated live market updates for 93.8FM, and authored investment articles for the Business Times newspaper. He graduated with a Bachelor of Commerce in Accounting & Finance from the University of Western Australia.

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