CapitaMalls Asia issue 10yr Retail Bond

CapitaMalls Asia Limited is offering a 10 years maturity Bond to retail investors.

This is a Callable Step-Up Bond.

For the first 5 years (from 2012 to 2017), the interest rate is 3.8% per annum.

For the next 5 years (from 2017 to 2022), the interest rate is 4.5% per annum, if the bonds are not redeemed back by the issuer i.e. CapitaMalls Asia.

Note that from 12 Jan 2017 onwards, CapitaMalls Asia could exercise its right to redeem yearly the principal of the issued bonds, in whole or in part. So the bond may mature earlier than the expected Maturity Date (12 Jan 2022) if the issuer calls back the bond. (“How the Bonds Work” is illustrated on page 15-16 of the Prospectus”).

Interest is paid semi-annually.

Issue Date: 12 Jan 2012

Maturity Date: 12 Jan 2022

Public Offer: 4 Jan – 9 Jan 2012 via ATM electronic application, min $2,000.

Direct Placement:  3 Jan – 9 Jan 2012 to DBS Bank, min $50,000.

CPF and SRS funds are not allowed for subscription.

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Europe at the Brink

This 23 minutes WSJ documentary brings together its editors and reporters who examine the origins of Europe's debt crisis and why it spread with such ferocity to engulf much of the continent and threaten the entire world.

In 2012, low growth is already expected. Our PM Lee has said as much recently in his New Year message which stated GDP grew 4.8% in 2011 instead of the government forecast 5%.

It is anyone's guess how the Europe drama will develop further this year. Another global recession is not impossible. Looking at financial history, especially from the Great Depression period, I wonder if we are near experiencing the double dip after the initial 1929 crash i.e. the 1937-1941 recession. Circumstances were different but if for the lack of growth and increase in austerity, the market appears dangerously close to a repeat of the past. A rather long article from Economist details more.

In the past three months, I have been tracking the market volatility and particpating in the market action via trading derivatives e.g. MSCI S'pore futures. Certainly not much to cheer about in 2012, in my view (if one is a long-only investor).

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TM Legacy Plus (revised)

Tokio Marine Life Insurance revised its highly popular TM Legacy Plus from 14 October 2011. It's a whole life insurance plan with a Minimum Benefit payable by entry age. Beyond a prescribed age, the payout will be only the basic sum assured together with attaching bonuses (reversionary and terminal).

Some quick observations-
1. The Minimum Death Benefit is adjusted upwards across all age groups.
    Entry Age (nx b'day)            MDB multiplier
            1-31                               2.50
            32-34                             2.40
            35-39                             2.30
            40-44                             2.00
            45-49                             1.75
            50 and above                  1.45

2. Instead of up to age 65, the Minimum Death Benefit is extended to age 70. This applies to the Critical Illness accelerated rider as well.

3. Guaranteed cash value is somewhat reduced as compared to its version prior 14 Oct 2011.

4. More emphasis is now placed on the Total Cash Value, where the Terminal Bonus rates have doubled for policy incepted 25 years and above.

5. Removal of exclusion clause for Critical Illness rider where Tokio Marine will not pay CI claim for
"any congenital or inherited disorder which first manifested itself before the Life Assured’s 7th birthday".

6. Premiums are revised upwards (average 20-25% higher than previous version).

Comments-
Though it is clear the plan is now revised to focus on the protection element (by the MDB), I still feel for the previous version. Probably a distinction has to be made between the standard no-frills TM Legacy plan and this Legacy Plus; hence, the impact on pricing as well.

Nonetheless, the removal of the above specific CI exclusion clause is a welcome change. In cases of autism (where symptoms typcially occur between ages 2-3), a policy bought at childbirth on the old policy wording would be subject to greater scrutiny upon claim. Now, no longer an issue with the removal of this contentious clause.

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