Today, Azalea Asset Management has released the Astrea 7 bonds for application. Application will close on 25 May 2022, 12pm.
Similarly to the past launches, there are three classes of bonds: Class A-1, A-2 and B, backed by cash flows from a US$1.9 billion portfolio of investments in 38 Private Equity Funds. Only Class A-1 and B bonds are available for application by retail investors.
Class A-1 (Stock Code: V7AB) comprised of S$280 million, pays a fixed rate of 4.125% per annum. This is payable every 6 months. If the bond is not redeemed after 5 years, there will be a 1.0% p.a. one-time interest rate step-up.
The Class A-1 Bonds have a maturity date of 10 years, with a mandatory call by the Issuer at the end of year 5, if the following conditions are met:
- the cash set aside in the Class A Reserves Accounts is sufficient to redeem all Class A-1 Bonds; and
- there are no outstanding Credit Facility loans.
Class A-2 bonds are not available for application by retail investors in Singapore and thus I shall not cover too much here.
Class B bonds (Stock Code: V7BB) comprised of US$100 million and pays a fixed rate of 6% per annum. Similarly to Class A-1, the interest is paid every 6 months. After Class A has been fully redeemed or reserved, 90% of available cash then will flow into the Class B Reserves Accounts.
Here is a summary of what I have just covered:
| Class | Principal Amount | Interest Rate | Scheduled Call Date |
Interest Rate Step-Up |
Ratings (Fitch/S&P) |
Maturity Date |
| A-1 |
S$526 million
(US$380 million)
Public offer: S$280m
Placement: S$246m
|
4.125% p.a. | 27 May 2027 | 1.0% p.a. | A+sf/ A+ (sf) | 27 May 2032 |
| A-2 | US$175 million | 5.35% p.a. | 27 May 2027 | 1.0% p.a. | Asf/ Not Rated | 27 May 2032 |
| B |
US$200 million
Public offer: US$100m
Placement: US$100m
|
6% p.a. |
27 May 2028
|
1.0% p.a. |
BBB+sf/ Not Rated
|
27 May 2032 |
Astrea 7 Transaction Portfolio
The quality Transaction Portfolio is diversified across 38 Private Equity Funds which are managed by 29 GPs and invested across 982 Investee Companies.
Weighted average fund life stood at 5.3 years and is mature and cash generative.
The portfolio net asset value is overweight in the U.S market at 55%. Europe and Asia makes up 27% and 18% respectively.
Summary of Astrea 7 Bonds
In my opinion, the fixed interest rate of 4.125% for the Class A-1 bond is very attractive. Bonds are a good way to diversify their stock portfolio which I have done so for my wife’s stock portfolio.
However, every investment carries some form of risks. You can read more of the risks investing in Bonds in the FAQ section of Astrea 7’s website.
One thing investors should take note is that the Bonds are not guaranteed by any entity, including Temasek.
I love to add some of Astrea 7 Class A-1 bond. However, I have deployed most of my cash into the stock market and my war chest is empty.