Astrea VI Bonds – What You Need To Know Before Buying!
Astrea VI Class A-1 bonds retail bonds interest rate is NOW OPEN!
It is set at 3% per annum. This payment of 3% will be given out semi-annually, on 18 March and 18 September each year if you are a bondholder.
Application closes on 16 March 2021, 12pm and will be in multiples of S$1,000 with a minimum of S$2000!
It can be balloted via ATM or via internet banking.
It will start trading on the SGX on 19 March at 9AM.
BONUS at 5years
If conditions are met: The issuer will redeem the Class A-1 bonds in full on 18 March 2026 and give you a bonus payment of 0.5% of your bond principal at redemption.
If it is not redeemed on 18mar2026, it will have a one-time step-up from 3% to 4% per annum after this date. Bond final maturity is in 10years
With Singapore Savings Bond 1April2021 5y average return of ONLY 0.61%pa, this is worth considering.
Is it Risk Free
The Astrea VI Bond is launched by Azalea Asset Management, which is indirectly wholly-owned by Temasek Holdings. However, it is NOT TO BE ASSUMED as risk-free.
Astrea VI is ultimately a private equity collateralized fund obligation which is back by cash flows from a diversified portfolio of PE funds.
Singapore Savings Bond on the other hand is backed by Singapore Government and of the highest risk quality.
Main Risk for Astrea VI bond
If the PE funds are unable to pay, it could affect cash flow to bond holders.
The Class A-1 Bonds is ranked in the 5th clause when it comes to the payment schedule.
This chart below shows the priority of payments.
How Does Astrea VI bond Compare with Astrea V
Astrea V bond promised 3.85%pa.
However, interest rates where much higher then.
A look back at the performance of the price shows that it is relatively stable.
The decline in Mar2020 and recovery was a good stress test and markets interpretation of its risk.
It now trades above par of $1.00.
I balloted for 11,000
The allocation results of the Astrea V bond showed that a larger percentage of the public offering was allocated to investors that applied for amounts between $5,000 to $10,000 and $11,000 to $39,000.
Using that previous results, I chose to ballot for 11,000 lots to be in the highlighted red tier and did so via my OCBC ibanking.
Hope the breakdown helps.
Invest in it if it fits your investment goals and risk appetite.
Last updated on April 6th, 2021 at 02:31 pm
Leave a Reply