Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On Friday 9 September, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders voted to approve the Media Business Spinoff and the Proposed Restructuring which will allow SPH to spin off the various media assets and some supporting assets it has heretofore controlled into a new non-profit Company Limited by Guarantee.</p><p>The idea is that the "lifting" of the restrictions of the Newspaper Printing and Presses Act (“NPPA”) would then provide SPH <em>"with greater financial flexibility to tailor its capital and shareholding structure to unlock and maximise value for all shareholders."</em></p><p>As discussed first in <em><a href="https://www.smartkarma.com/insights/singapore-press-own-time-own-target-restructuring-lor-come-i-clap-for-you" target="_blank" data-smartkarma-citation="insights:51141" rel="noopener">Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)</a>,</em> the upside did not seem huge. A few months later SPH decided that the rest of the business would be taken over by <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> in return for a basket of cash, units of <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a> and units in <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a>. This was discussed in <em><a href="https://www.smartkarma.com/insights/alamak-sph-restructuring-restructured-as-keppel-bo-jios-sph-holders" target="_blank" data-smartkarma-citation="insights:55370" rel="noopener">Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders</a>, </em>and at that, the upside did not seem huge. The price jumped from a div-adjusted S$1.88/share before the Keppel news to S$1.92/unit to close some of the gap. The remaining spread is now quite small at a bit less than 10cts on a forward div-adjusted basis, or about 5%.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/249/original/Screenshot+2021-09-11+at+2.04.22+PM.png?1631340279" class="editor-image img-responsive" data-smartkarma-image-id="229249"></figure><p></p></section><p>From the day before the Keppel announcement until now, the value of the non-cash portion of the Consideration (i.e. the 0.596 units of KREIT and the 0.782 units of SPH REIT) have fallen 2.55% in value while the value of an equal weighted Peer Basket of REITs has fallen 2.45%. That tells you that despite the first-day drop in the value of SPH REIT and Keppel REIT resulting from market participants' expectation that hedging pressure on those two REITs would cause them to underperform the market, the underperformance has been minimal. I expect the high cost of borrow and relative illiquidity of S-REITs has limited the appeal of the arb to arbitrageurs.</p><p>Now we wait for the EGM to approve the distribution of SPH REIT units and the Scheme Meeting to dispose of the SPH business in return for KREIT units and cash. That should happen in the October/November timeframe.</p><p>In the meantime, we check progress of the arb, and what the value of the Consideration is compared to a comparable Peer Basket.</p>

On Friday 9 September, Singapore Press Holdings (SPH SP) shareholders voted to approve the Media Business Spinoff and the Proposed Restructuring which will allow SPH to spin off the various media assets and some supporting assets it has heretofore controlled into a new non-profit Company Limited by Guarantee.The idea is that the "lifting" of the restrictions of the Newspaper Printing and Presses Act (“NPPA”) would then provide SPH "with greater financial flexibility to tailor its capital and shareholding structure to unlock and maximise value for all shareholders."As discussed first in Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You), the upside did not seem huge. A few months later SPH decided that the rest of the business would be taken over by Keppel Corp (KEP SP) in return for a basket of cash, units of SPH REIT (SPHREIT SP) and units in Keppel REIT (KREIT SP). This was discussed in Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders, and at that, the upside did not seem huge. The price jumped from a div-adjusted S$1.88/share before the Keppel news to S$1.92/unit to close some of the gap. The remaining spread is now quite small at a bit less than 10cts on a forward div-adjusted basis, or about 5%.From the day before the Keppel announcement until now, the value of the non-cash portion of the Consideration (i.e. the 0.596 units of KREIT and the 0.782 units of SPH REIT) have fallen 2.55% in value while the value of an equal weighted Peer Basket of REITs has fallen 2.45%. That tells you that despite the first-day drop in the value of SPH REIT and Keppel REIT resulting from market participants' expectation that hedging pressure on those two REITs would cause them to underperform the market, the underperformance has been minimal. I expect the high cost of borrow and relative illiquidity of S-REITs has limited the appeal of the arb to arbitrageurs.Now we wait for the EGM to approve the distribution of SPH REIT units and the Scheme Meeting to dispose of the SPH business in return for KREIT units and cash. That should happen in the October/November timeframe.In the meantime, we check progress of the arb, and what the value of the Consideration is compared to a comparable Peer Basket.

SPH Shareholders Approve Spinoff - There's Still a Spread To Earn

<p>The Rights of <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. </p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/288/original/Screenshot+2021-09-07+at+12.03.08+PM.png?1630987559" class="editor-image img-responsive" data-smartkarma-image-id="228288"></figure>
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<p>If there were borrow on SMM left, it would be a great arb.</p>
<p>As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. </p>
<p>They have the rest of today and tomorrow to trade. </p>
<p>There is also an "MGO Option." And this bit is interesting.</p>

The Rights of Sembcorp Marine (SMM SP) started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. 



If there were borrow on SMM left, it would be a great arb.
As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. 
They have the rest of today and tomorrow to trade. 
There is also an "MGO Option." And this bit is interesting.

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Bond market data and technology, BondEvalue

BondEvalue

Bond market data and technology

BondEvalue is a Singapore-based Fintech that specializes in bond market data and technology. The company's information services business offers bond market data on hard-currency corporate & sovereign bonds across Asia, Middle East, Europe and the Americas. The data, which includes bond prices, yields, news and analytics, is offered to end investors via interactive Mobile and Web Apps. Investors can sign up for a free trial of the service either via the company's website (https://bondevalue.com) or by downloading the BondEvalue Mobile App (http://onelink.to/wej7jq). BondEvalue is also developing an electronic bond exchange, BondbloX in Singapore that allows investors to trade bonds electronically in smaller sizes (US$1,000 or equivalent). For more information, visit https://www.bondblox.com/

Bond Market Data and Technology

Credit

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and 0.7% respectively. Saudi’s TASI was also up 0.6% while UAE’s ADX was down 0.1%. Brazil’s Bovespa also closed 0.8% higher. The Chinese Vice President said that Beijing will back private business in a bid to boost investor confidence. Asian markets had a mixed start – HSI and Nikkei gained 1% and 0.9% in early trade. Shanghai was broadly flat. Singapore’s STI was down 0.2%. US 10Y Treasury yields climbed another 2bp to 1.34%. EU Main CDS and Crossover CDS spreads tightened by 0.5bp and 2.7bp respectively. Asia ex-Japan CDS spreads widened 0.1bp.

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div>
<p>Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. </p>
<p>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</p>
<p>We have covered the listing and previous placements for KDC in our earlier notes:</p>
</div><div><ul style="list-style-type: disc;">
<li>Sep 2019 placement for US$273m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-just-in-time-for-the-index-inclusion" target="_blank" rel="noopener">Keppel DC REIT Placement - Just in Time for the Index Inclusion</a>
</li>
<li>May 2018 placement for US$228m: <a href="https://www.smartkarma.com/insights/keppel-dc-reit-placement-accretive-acquisition-and-probably-expected-dilution" target="_blank" rel="noopener">Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution</a>
</li>
<li>IPO: <a href="https://www.smartkarma.com/insights/first-of-its-kind-exposure-to-rapidly-growing-data-centers" target="_blank" rel="noopener">First of its kind exposure to rapidly growing data centers</a>
</li>
</ul></div>


Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the recent acquisition of its first China data centre and to pay down debt. 
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
We have covered the listing and previous placements for KDC in our earlier notes:

Sep 2019 placement for US$273m: Keppel DC REIT Placement - Just in Time for the Index Inclusion

May 2018 placement for US$228m: Keppel DC REIT Placement - Accretive Acquisition and Probably Expected Dilution

IPO: First of its kind exposure to rapidly growing data centers



Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

David Blennerhassett

Last Week in Event SPACE:  Afterpay, SPH, ESR Cayman, Prosus/Naspers, Kingsoft, Milton, SOHO China

Singapore

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

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Keppel Corp (KEP SP)

SPH Shareholders Approve Spinoff - There's Still a Spread To Earn

SPH shareholders approve the Media Biz spinoff, now there are ~4mos left until payout (assuming EGM/Scheme Mtg in Oct/Nov gives the thumbs up)....

Travis Lundy

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Last Day+ for the Sembcorp Marine Rights - Replacement Trade for long-only/passive investors, and MGO option for arbs/events. There is some...

Travis Lundy

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and...

BondEvalue

Keppel DC REIT Placement - Most of the past Deals Have Done Well, Though This Won’t Be Accretive

Keppel DC REIT (KDCREIT SP) plans to raise up to US$151m (S$204m) via a mix of a private placement. The company will use the proceeds to fund the...

Sumeet Singh

Last Week in Event SPACE: Afterpay, SPH, ESR Cayman, Prosus/Naspers, Kingsoft, Milton, SOHO China

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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