Thursday, April 12, 2012

Know what you are getting into in the Genting Perpetual Bonds

Many people I believe are recently talking about the upcoming Genting perpetual bonds and I thought it will be best if you read the prospectus first before blindly subscribing to it. If you do not know these 3 things, I suggest you better read the prospectus first:
  1. It's a perpetual bond. Layman terms? There is no need for Genting to pay back your principle ever, although it is stated that they can recall the bond if they wish to

  2. Obligations are subordinated. They have almost a whole page of obligations which means that this bond is really ranked quite lowly. Based on the wordings, it would seem that this bond is even more junior than preference shares. One thing I learned about prospectus. If you don't understand it, it's most probably something that is of disadvantage to you.

  3. The distribution payment can be deferred not more than 20 nor less than 15 Business Days prior to a scheduled Distribution Payment Date, and there is no obligation for Genting to pay any distribution on any distribution payment date.

There are some other points but I think the above, especially the last point, is something that you should especially take note. And guess what? For the last point, even if they do not pay you, it does not constitute as a default.

If you still think it suits you... well, to each its own. Only 1 word for me. Avoid.


Anonymous said...

so if i were to redempt my bond, will i recieve my par at let say at the end of 10 yr?
Or will i be getting nothing back?
or issit based on the current mkt value?
please advise thanks

chantc said...

Genting will not be obligated to redeem your bond. It can choose not to. If I recall correctly, this bond will be listed in SGX so you'll sell it at whatever the market has priced it. Please take note of this as you may not get back at par value, and there are extra brokerage charges to take into consideration.

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