Category: SG Budget Babe

Save Money by Getting These Baby Must-Haves from Taobao!

It is no secret that I’m a huge Taobao fan – after all, I’m that bride who saved tons of money by purchasing my wedding stuffs on Taobao, including my customized wedding gown! I’ve written about my Taobao wedding purchases here and here previously, and have been using SGShop for my purchases since 2016.

Well, with all the upcoming baby expenses, I’ve also been shopping around diligently and doing lots of window shopping at Mothercare and Kiddy Palace, among other shops, to compare prices and quality. What I’ve discovered is that many of the items sold locally are priced at a premium, and I’ve actually been able to find the same – if not extremely similar – products on Taobao instead, therefore saving me tons of money!

While there are still some items that I’ll get in person locally – such as a UV steriliser and a car seat for safety reassurances – I’ve found Taobao to be cheaper by far for many of the items I feel we will need for our baby. Even after factoring in shipping costs, many of these items cost much lesser than those at baby fairs here!

Without further ado, here’s my Taobao shopping list and haul:


Baby Shower Net
Afraid that baby might slip out of your hands during shower time? Use a baby shower net to eliminate any chances of baby slipping or even hitting his/her head so you no longer have to dread bathtime!



Price: S$4.50
Link: here

Baby Rompers
Get those made from pure cotton as some babies may have sensitive skin.


Price: S$2
Link: herehere and here.

Baby Towels
You’ll need lots of these for wiping off milk spills and baby saliva. Choose among these absorbent gauze / cotton / bamboo fibre ones from Taobao.



Price: S$2
Link: herehere and here.


Baby Sling
Got no money for a Tula? Missed Aviva’s promotion for a free Tula with their maternity insurance packages? Fret not, you can get cheaper and stylish baby slings here as well! This design comes with a baby seat to offer more support as well.



Price: S$18

Link: here


Waterproof baby bedsheets
So that the mattress underneath remains clean, dry and unstained. Can use for baby’s bed or even on your own (to absorb any leaking breastmilk!). These ones are washable so you can easily reuse them as well.



Price: S$2.25
Link: here and here, or get a bigger sized one here.



Crib Storage Organiser
All you need for changing baby within this nifty organiser for putting diapers, wet wipes and more. I see similar models retailing in Singapore shops for much higher prices!



Price: S$18

Link: here


Baby Cot
Been eyeing the gorgeous baby cot featured on Zoe Raymond and Naomi Neo’s Instagram page? So was I…until I found out that the cot retails for $1,500 and they were sponsored for it anyway. If you’re not keen to spend so much, here’s a close substitute on Taobao that you can consider for 1/7 of the price.

 

Price: S$200
Link: here and here

Baby Gym
Perfect for hours of entertaining your baby while you get other tasks done, this baby gym will also train your baby’s motor skills while having fun in the meantime.




Price: S$11
Link: here

Baby Bib (for meals)
Great for avoiding a mess during mealtimes as it catches falling food.



Price: S$2.25 each
Links here, herehere and here.


Belecoo Baby Stroller
I love this baby pram for its ability to transform from a horizontal crib into an upright seat, which sees your baby through his/her newborn days all the way till they’re a toddler. I’ve seen the same strollers being sold by third-party retailers here in Singapore for 2 to 3 times of its price, so you might as well buy straight from Taobao and use all that savings to get your other baby essentials instead.

Lightweight, foldable and with a reclining / upright option, this baby stroller also takes heavy weights so you don’t have to worry about the pram toppling over!



Price: S$52

Link: here


Dual-function Maternity & Breastfeeding Pillow
This will be a lifesaver for mummies when you hit your second trimester and your baby bump grows so big that you can barely sleep easy at night due to the discomfort. Cushion it and sleep easier with the help of a maternity pillow, which will support your baby bump and even out the weight distribution.

Most maternity pillows are big and bulky (my bed doesn’t have space for that!) so I wasn’t very keen on getting one initially, until I found this dual-function model that can double-up as a breastfeeding pillow, or even for baby to lie on!



Price: S$13.50
Link: here


Maternity Photoshoot Outfits

Get your maternity outfits for cheap on Taobao for a photoshoot to commemorate your pregnancy journey – after all, you only get pregnant a few times in your life!



Price: S$13 and up

Link: here


Diaper Bag

Skip the jujube and go for a much more affordable diaper bag that is equally (if not more) stylish and easier to match with your fashion outfits.

This is a must-have whenever you bring baby out. It is important to look for one that is waterproof and with many compartments inside so that you can fit all the diapers, milk bottles, baby wipes, baby towels, change of clothes, etc.



Price: $11.15

Link: here


*** Sponsored message below ***

SGShop is celebrating its 7th birthday this August, and they’ve lined up tons of freebies and promotions to share with all of us, making it the perfect time for you to check out your items and save on shipping and service fees!



Key promotions that I reckon are worth taking advantage of during their birthday month:

  • 13 – 30 August: free / agent fee capped at $17
  • 1 – 31 August: enter the jackpot with every purchase made! There will be 3 tiers of prizes available – 7 winners get $70 coupons, 700 winners get 70% off service fees, while another 70 will get 10% off normal sea shipping!
Which option should you pick? Buy-for-Me, Ship-for-Me, or SmartShop? 

Here’s an easy guide to help you decide:


Buy-for-Me

Ship-for-Me

SmartShop

If you are…

Not fluent in Mandarin and need a third-party to help liaise on your behalf


Need to customize your item or enquire about features


Looking to save money on service fees


Fluent in Mandarin to communicate with sellers directly on Taobao



Looking to only make payment once.


Items already have estimated weights so shipping fees can be factored in right from the start. The SmartShop items are marked by the blue S logo on the top right corner of listings.

You get

Service fees includes inspection to ensure quality and spot defects

The option to add on inspection fees

No surprises in shipping fees

Ordering process

1. Order and pay for the cost of the product + Chinese domestic delivery.


2. Item arrive at SGShop warehouse in China, where it’ll be inspected and weighed for international shipping to Singapore.


3. You will then be prompted to make a second payment to SGshop for international shipping + 4 – 8% service fees + $0.98 customs clearance.


4. Opt for self-collect or home delivery at a fee.


This method involves 2 – 3 rounds of payment (China-to-China, China-to-Singapore and Singapore domestic shipping).

1. Shop and pay through Taobao’s own site.


2. Enter SGShop Guangzhou warehouse address as the delivery destination.


3. Submit your order details with the relevant information such as the Taobao order ID and delivery tracking number on SGshop’s website


4. When the items arrive at SGShop warehouse, they will be weighed to calculate the shipping cost. You will then be prompted to make payment to SGshop for the shipping from China to Singapore + $0.98 customs clearance.

5. Opt for self-collect or home delivery at a fee.


1. Browse under the Smartshop Featured Items tab here.


2. Add to cart and check out.


3. Make payment, which includes product price and international shipping.


4. Choose the collection or delivery method once items have arrived in Singapore.






If you’re a first-time user, here are some promo codes I’ve consolidated for you to take advantage of:

  • Click here for $5 free via my referral code (with no minimum spending!)
  • WELCOME50” for 50% off service fees
  • SGBUDGETBABE10” for 10% off economy air shipping
Have fun shopping!

Disclaimer: The bottom portion is a sponsored message by SGShop to get the word out about their services. All reviews and recommendations above are that of my own and sourced through my own time browsing and shopping online. I’ve been a satisfied customer of SGShop since I’ve started using them many years ago, and have previously shared about how their customer and warehouse team was a big help when it came to customizing my wedding gown and other items. 

If you use my referral code for $5 free, I’ll get $5 too! 🙂 you can also share your own referral code with your friends and family afterwards so each of you get $5!

Do also note that all of the Taobao items above are sourced by myself over the past few months and were not recommended by SGShop. If you’ve any more great Taobao finds to share with fellow parents in Singapore, please feel free to leave me a comment below with the links and I’ll be happy to look at adding them to this list!

With love,
Budget Babe

Is Home Insurance Really Necessary?

Considering how you already have to pay for your mandatory HDB fire insurance (or even a mortgage fire insurance as well, for those of you on a bank loan), do we really need to still get home insurance?

Many people mistakenly believe their house is completely covered for, but the truth is far from it. HDB fire insurance only covers for damages to core structures provided by HDB (eg. beam collapse, walls or flooring), whereas your bank’s mortgage fire insurance mainly protects your bank’s financial interest and not yours. What that means is that in the event that your house (the mortgaged property) is damaged by a fire, the bank can make a claim on the policy to protect themselves in the meantime. This works in the same way for private properties such as condominiums where the management requires you to get fire insurance. This enables the management group to make a claim on the policy to restore the premise to its original condition, should anything untoward happen.

Thus, in the event of fire, if you solely rely on the abovementioned policy(ies), you most likely won’t be able to claim for damages on your house contents.

That includes stuff like your furniture, built-in wardrobe, jewelry, electronics and more! A (home) contents insurance policy has to be bought separately, if you wish to obtain coverage for those items; and you should, especially if you’ve spent a significant amount on your renovation and/or keep valuables at home.

Fire insurance

Home insurance

Status

Mandatory

Optional

Premiums

As low as a few dollars for a 5-year plan (eg. $5.50 for a 4-room HDB for 5 years of coverage)

Ranges from $30 – $400, depending on your coverage

What’s covered

Only covers damage to your home structure, replacement of any original fixtures or fittings by HDB / the rebuilding of your home for landed properties.

Does NOT cover damage to home contents in the event of fire.

Covers the contents in your home, renovation works, home repairs and incidental expenses incurred for the alternative accommodation period, etc, in the event of fire, burst pipes, natural disasters or burglary.

What’s more, you’ll probably also need coverage for:

       Your home contents: furniture, mirrors, domestic appliances, AV equipment, electronics, etc.

       Renovation work

       Personal liability: eg. if your neighbour’s property is damaged due to leakage caused by a burst water pipe in your house and demands you to pay for it

       Alternative accommodation and quality of life: expenses incurred for when you’re unable to stay in your insured home, including rent, laundry, daily necessities, etc. 

How FWD Home Insurance stacks up

Back in September last year, I did a quick review of the various insurers that offer home insurance here, so I’m adding onto that list with today’s review of FWD after having gone through their policy coverage with its terms and conditions.

Low policy premiums

From as low as $31 a year, the value offered in terms of what you’re getting covered for is extremely compelling (compared to if you were to be uncovered and something unfortunate strikes).

No excess payable

You do not have to pay anything when you claim. On the other hand, most of the other insurers require us to pay at least $100 for loss or damage caused by burst pipes or a natural disaster, whereas another local insurer requires an excess payable of $350 for each and every claim made on personal effects, home contents and renovation. Probably not what you want or can afford when your house has just been ravaged!

Flexible renovation coverage

Needless to say, your policy premiums will depend on the insured amount, and in the case of renovation, a minimum of $50k – $100k coverage sum is the lowest you can opt for. However, do you really need to cover the entire cost of what it took you to renovate your house before you first moved in? FWD allows consumers to choose from $20k and up so we can get protected without overpaying for insurance.

Alternative accommodation and incidental expenses

Rental, laundry, daily necessities, toiletries and other expenses that may be incurred during the period where you have to find alternative accommodation since your house is no longer habitable, FWD home insurance covers for it as well. 

Home assistance expenses

In the event of a power failure due to a burnt fuse or malfunction of power supply socket, FWD will also cover the cost of repair for such electrical services. In addition, should you need to clear any blockage in your pipes or floor trap, or if your air-conditioner is not working due to a fault or mechanical malfunction (not wear and tear), the costs of repairs will also be covered. Moreover, should you require the help of a locksmith if you’re unable to enter your home or any rooms within, you can also claim for this once every year.

Rent protection for landlords

I have a number of friends who rent out their second property for rental income, and they often complain about tenant issues. FWD home insurance addresses this pain point by covering the following scenarios for up to $3,000 a month:

       Your tenant defaults on their rent

       Loss of rental income because the premise becomes uninhabitable due to an insured event

       Murder / suicide within the premise while it was rented out, causing the house to be untenanted

       Up to $3,000 in legal costs for tenancy disputes

Riders for pets and personal accident

Available for just $2 or $3 respectively per annum if you wish to add those on.

For my 3-room HDB flat, this was the quote I got online:

If you’re also convinced by FWD’s home insurance offering as I am, you can get your free quotation here, and don’t forget to utilize their 20% discount right now with the promo code HOME !

Disclaimer: This article is sponsored by FWD, but all opinions are of my own. My quote was obtained discreetly without FWD knowing that it was me who was enquiring on the other end of our Internet connection.

IPO Analysis: Is the Nikko AM SGD Investment Grade Corporate Bond ETF worth subscribing?

I’ve not been the biggest fan of corporate bonds because (i) I’m not always convinced about the reasons given by the company for the need to raise money from retail investors (ii) there’s too many horror stories like Hyflux and Aspial and (iii) too many retail investors seem to be drawn to the juicy yield payouts without properly evaluating the underlying financial health of the company.

However, the latest Nikko AM SGD Investment Grade Corporate Bond ETF might just be another decent investment tool (and far more superior than any previous corporate bonds such as the ones named above) for those who have always stayed away from corporate bonds for the same reasons that I have.



The IPO for this has gone live and will last from 23 July – 16 August, so that’s enough time for you to do your due diligence before you decide if this investment makes sense to you. In the meantime, here’s my take on the ETF:

Details:
– The bond is launched by Nikko AM, one of the largest ETF managers in Singapore and the same company behind popular Nikko AM Singapore STI ETF and ABF Singapore Bond Index
– Indicative yield: 3% – 3.22% per annum
– Total expense ratio: 0.3% (30 cents per year for every S$100 you invest – confirmed for the first 3 years)

– I recommend applying through FSM where there’s now a 0% commission promo and since their minimum amount is lower vs. other brokers who are requiring a min. of $1000 to apply
– IPO applications close on 12 noon on 16 August 2018
– Minimum subscription amount: S$100
– Starts trading on SGX on 27 August 2018 at 9am

What I like about this ETF



1. Lower risk
By investing into a basket of corporate bonds, the risk and impact of one company defaulting is much lower compared to if you invest directly into a single company’s bonds. After all, you really don’t want another “big shock” like the one retail investors got from Hyflux, or see defaults like what Swiber did on their bond payments.

Buying into this ETF means you get exposure to over 100 corporate bonds from over 50 companies, which means that even if one of them default, it probably won’t even leave much of a dent in your overall portfolio. The constituents of this ETF comprise of several reputable companies that are in relatively strong financial health and unlikely to go bust, such as DBS, UOB, HDB, LTA, etc. I’ll go deeper into the constituents in detail later in this article.

Of course, the downside of the lower risk in this ETF is that you also get a “lower” yield of approximately 3% vs. the juicy 5% – 6% offered by some other corporate bonds, but would you rather go for a high-risk-high-returns bond option where you could potentially lose your entire capital, or accept a lower-risk investment where your returns are pretty much guaranteed? Your choice.

According to The Business Times, it seems like the Monetary Authority of Singapore (MAS) might even be a seed investor in this, although Nikko AM has declined to confirm it.



2. Higher yields than the Singapore Saving Bonds / bank savings / fixed deposits
Some other low risk options you can also choose from, if not for this ETF:

Tool

Minimum Sum

Holding Period

Average Yield

$10,000

3 months – 5 years

0.08% – 1.4%

$1,000

2 – 3 years

2.02%

$500

1 – 10 years

1.78% – 3.11%

$3,000

N.A.

0.8% – 2.85%

$1,000

5 – 30 years

1.625% – 3.25%

$100

Up to you!

3%


The only comparable instruments that come close to the 3% p.a. offered on this ETF are the SSBs and SGS, but those require a longer holding period of at least 5 – 10 years before you start to see those kind of returns.


3. Lower investment sums needed
It is generally quite difficult for most average retail investors to access Singapore’s corporate bond market, because the typical minimum sum of S$250,000 just for a single bond issue is usually out of reach for many of us. Sometimes, rare opportunities like the recent Astreal bonds appear, but even that required a minimum of $2,000 to subscribe and also carries a much higher risk (since it is on private equity investments). However, the Nikko AM SGD Investment Grade Corporate Bond ETF offers investors the chance to access these investment-grade corporate bonds for as low as S$100. 

4. Low costs
I’ve never liked unit trusts or buying bonds through Investment-Linked Plans (ILPs) because the high management costs / distribution fees eat into your returns. Many people don’t realise that simply paying 1% in investment management fees could easily eat up 1/3 of your wealth eventually as these fees compound to quite a sizeable sum, which is why I’ve never advocated investing in unit trusts, mutual funds, or any sort of investments through an insurer and prefer to DIY instead.

The only costs associated here would be the expense ratio – which is extremely low at just 0.3% i.e. yo pay 30 cents every year for each $100 you invest – and your buy/sell broker fees, which can vary depending on which brokerage or promotional rate you’re using. I recommend FSMOne for this if you don’t already have an account.

You can also see the impact between a 0.3% and 1% fee in the table below:

Source: Fundsupermart


5. Higher liquidity
Many of the wholesale bonds which this ETF invests in are generally traded over-the-counter instead of a centralised exchange, so retail investors not only face difficulties in getting access but also in selling it due to the lack of liquidity.

On the other hand, this ETF will be traded on SGX so you should be able to easily buy or sell lots when you need or wish to.


What am I really buying into?



You can view the full prospectus hereview the highlights here lodged with MAS, or the product brochure here.


In summary, the biggest 10 holdings in this ETF and their respective weightages are:




With the exception of Huarong Finance, you’ll be hard-pressed to not recognise the other names, many of which are quasi-government agencies or even indirectly backed by our local government as well. It’ll be hard for them to fail, and if any of them do, worrying about this ETF will be the last thing on my mind because there’ll probably be bigger concerns of the Singapore economy failing or going into a recession instead.

In total, there are 102 bonds from 45 issuers in this ETF, with an average coupon yield of 3 – 3.5%. 

How often will I be paid dividends?
Once a year.

What’s the quality of the bonds in this ETF?
They’re mostly investment-grade and large-cap bonds, but do note that 22% of the current bonds are not weighted, such as SIA and LTA.

Can I buy this using my CPF funds?
No, as it is currently not included under the CPF-IS. However, who knows, perhaps this might just change in the future if the interest in this ETF continues to grow.


What I don’t really like about this ETF


1. Not all the constituents bonds are exactly “investment-grade” nor “corporate”.
The name of this bond may be slightly misleading, since 22% of bonds are unrated and there’s a significant portion which aren’t exactly what we tend to think of as “corporations” (HDB, LTA, etc). Nonetheless, this is just a personal gripe I have about the choice of name for this ETF, but I don’t have much of an issue about the underlying bonds it is investing into, which are actually far more solid than the previous corporate bonds I’ve reviewed on this blog.

2. If we continue in a rising interest rate environment, this ETF may no longer be as attractive.
3 % – 3.22% is a decent return for an investment tool that you can trade anytime on SGX, and especially when you compare it to the other fixed-income instruments that I’ve mentioned earlier. But if interest rates go up, the market value of the underlying bonds will likely drop, which will then also affect this ETF.

For those who are unfamiliar with the link as to why rising interest rates are bad for bonds, here’s a quick explanation. Imagine you paid $1,000 to purchase a bond with a 3% coupon payout, which then trades on the bond market. Now, should interest rates rise, new bonds may then be issued with higher coupon rates in order to attract investors, so let’s assume a newer bond with a 5% coupon rate now gets launched. Since investors can now invest the same $1,000 for a bond with a higher interest rate, they’ll be less interested in buying your bond which has a 3% interest rate, so the market value of your bond lots go down (i.e. capital loss). 

Conversely, if interest rates fall, then that usually spells good news for bonds which would then trade at a price higher than what it was originally bought for upon launch.


However, I believe the ETF manager will also continue to invest into new bonds even as this happens, and since these new bonds will carry higher interest rates, we can then watch the ETF’s yield go up accordingly.

Nonetheless, we cannot predict the future, and as per my previous post on portfolio allocation to mitigate risks across market cycles, there will always be a place for bonds in one’s investment portfolio. 

So is this ETF worth buying into?

Yes if you are:

  • Looking for a low-risk investment tool with decent returns higher than what the banks / fixed deposits / Singapore Saving Bonds can offer you
  • Looking to add to the bond component of your investment portfolio, but you’re adverse against individual corporate bonds due to all the sagas and defaults that have happened recently
  • Looking for a bond investment with no minimum holding period or commitment (since you can trade this on SGX once it is listed on 27 August)
  • Looking to get exposure to the Singapore corporate bonds market without the high minimum sum needed nor the higher risk
  • Considering whether to cancel your ILP and do your own direct investments so as to stop paying for the high investment management fees (you can also combine this ETF then with the ABF Singapore Bond Index Fund, which I had in my ILP before I terminated it. That ETF currently trades at an indicated yield of 2.3%)

No if you:

  • Want much higher return than 3% given this (low) risk level
  • Are willing to take on higher risk for much higher returns

Until better opportunities present themselves, parking one’s emergency or excess cash in a mixture of this Nikko AM SGD Investment Grade Corporate Bond ETF with Singapore Saving Bonds and CPF voluntary top-ups certainly sounds like a viable idea to me as part of a multi-asset portfolio management strategy.

At any rate, I’d definitely prefer to go for this than most individual corporate bonds! 


Where can I apply for this ETF?

The easiest way would be to apply via FSMOne.com as it only requires a minimum of $100 to subscribe and is also currently running a promotion of 0% sales charge during this ETF’s Initial Offering Period from 23 July to 16 August 2018. 

This means you can enjoy a 0% processing fee to invest into this ETF, as long as you place your order before 12 noon of 16 August.


*** Sponsored message below ***

TO FIND OUT MORE ABOUT THIS ETF


  1. Read this article by the FSMOne.com Research Team to learn more about the NikkoAM SGD IGBond ETF.
  2. View the ETF factsheet here.

  3. Attend the seminar “Introducing the Nikko AM SGD Investment Grade Corporate Bond ETF on 1 August 2018, 12pm, at iFAST Financial Pte Ltd, 10 Collyer Quay #26-01 Ocean Financial Centre Singapore 049315. Click here to register now!

OPEN AN FSMONE ACCOUNT

Don’t have an FSMOne Account yet? You might probably want to consider opening one to get access to this bond ETF, as well as a whole suite of other investment products that is offered by Fundsupermart!
Head over here to open your free account right away so you can subscribe to this ETF and make full use of the 0% processing fees promotion! If you encounter any issues in getting started, you can also call them at 6557 2853 or email clienthelp@fundsupermart.com for more assistance.
*** End of sponsored message ***

What are your thoughts about this ETF, and is there anything I’ve missed out on? Let me know in the comments below!

With love,
Budget Babe

Is it Worth Joining A Co-Operative?

In a previous post, I wrote about what credit co-operatives (co-ops) do and the important role they play in society. I’ve also received some questions from readers as to whether it is worth joining a co-operative in Singapore, especially if they qualify for one.

After looking through all the benefits, I’m convinced that being a member of a co-op has its benefits and privileges.

Just to name a few of these benefits:

·      Gaining access to a wide range of affordable products and services

·  Financial solutions at reasonable interest rates (no need to resort to unlicensed moneylenders, please!)

·      Educational scholarships and bursaries awards

·      Hospitalisation benefits

·      Loyalty membership benefits

Today, there are 66 co-ops affiliated to the Singapore National Co-operative Federation that one can choose from.

Among these, there are credit co-ops that serve members working in the civil service, with the Singapore Government Staff Credit Co-operative (SGSCC) as one such co-op. Having registered in 1925, SGSCC is also Singapore’s first co-op.

Civil Servants: Member Benefits

Open to all staff who are employed in the civil service, statutory boards and government-linked companies, SGSSC provides the resources to help its members build a better future.

According to SGSSC’s website, there are three saving options for members:

·      Subscription Saving

·      Specific Deposit Saving

·      Fixed / Time Deposits

Working in a similar fashion as the Singapore Savings Bonds (SSBs, which fans will know I’m a huge advocate of), SGSCC’s saving schemes offer competitive  interest rates, while granting you the flexibility to withdraw your savings in times of need.

Moreover, all co-ops including SGSCC are regulated by The Registry of Co-Operative Societies of Singapore (under the purview of the Ministry of Community, Culture and Youth), and are required to have their accounts regularly audited. SGSCC’s long track record and history attest to their sustainability.

For more information on how co-ops are governed and regulated in Singapore, you can head over to MCCY’s website here to read more.

For all Singaporeans and Permanent Residents

The only credit co-op that has almost no restrictions (other than you needing to be a Singaporean or Permanent Resident) for joining as a member would be the TCC Credit Co-operative.

Apart from providing access to affordable financial solutions, TCC also allocates some of its surpluses to assist members in times of need through its Common Good Fund like hospitalisation grant, marriage grant and educational scholarships and bursaries awards. TCC also distributes dividends to its eligible members every year.

TCC members can even enjoy exclusive health screening packages at preferential rates at Thomson Medical. And should members get hospitalised, they can put in a claim for a hospitalisation grant of $30 per day (just like how the payouts on your insurance work, except that you don’t have to pay any insurance premiums for this one).

It’s also fuss-free to open a Savings Account as there are no administrative or membership fees involved. Their Subscription Savings Account, for instance, usually pays out 3% – 5% in dividends annually, which can be higher than other high-yield bank accounts which I’ve reviewed before on this blog!

Education Loan Options

TCC also provides its members with access to education loans at a flat interest rate of 2.2% per annum (p.a). Compare this to the likes of OCBC’s Frank Education Loan, which charges 4.5% p.a. (or effectively 5.17% per year if you pay it off within 2 years).

For Union Members

AUPE Credit Co-Operative Limitedis open to all union members. Members can also enjoy the provision of financial solutions, such as loans from as little as 4%* including medical loans for medical expenses or treatment costs, renovation loans (under $30k) to tide over getting your new home in order, and even study loans or grants for your children. In addition, should any member be hospitalised, you will also get a hospital benefit of $20 per day without the need to purchase any extra hospitalisation insurance.

Alternative Financial Solutions

I’ve mentioned previously that if you are seeking financial solutions, other than financial institutions, there are alternatives and one of them is credit co-ops. Credit co-ops are less profit driven than most commercial enterprises, and have a social mission, thus they are more willing to go the extra mile for their members.

Financial solutions dispensed by credit co-ops generally have a more flexible repayment period (up to 48 months) to help members manage their cash flow without feeling as though they’re being driven up the wall just to repay the loan.

Whether you need a short-term financial solution because you’ve unexpected medical expenses to pay off, or for your children’s educational needs, you may look at different forms of financial assistance including credit co-ops. If you’re unable to repay on time, you can also be rest assured that credit co-ops will do their best to help come up with a reasonable debt repayment schedule that meets your needs.

Where, then, does the money or interests earned by credit co-ops go to?


Well, surpluses earned by the credit co-ops are channelled back to its members in the form of benefits such as annual dividends (members of SGSCC received 3% dividend in their subscription capital in previous years), hospital benefits, or even educational awards and bursaries to members or their children.

Man, I wish my dad had joined SGSCC back then, so we could tap on their education bursaries with my good grades to help me tide through school! Unfortunately, he and none of us in the family knew about SGSCC, but now YOU do!

What Types of Co-ops Are There?

There are plenty of co-ops available in Singapore, but they generally fall under these categories:

1.    Campus co-ops

Formed in educational institutions, campus co-ops offer students and staff the platform and opportunity to develop their entrepreneurial skills. Examples include The Co-operative Society of Nanyang Technological University Ltd (NTU@COOP), Ngee Ann Polytechnic Consumer Co-operative Society Ltd and Temasek Polytechnic Co-operative Society Ltd.

2. Credit co-ops

Also known as Thrift & Loan societies, credit co-ops play an important role in improving the economic and social statuses of their members through no-frills saving schemes that encourage thrift.

3. NTUC co-ops

With over 10,000 employees employed, NTUC co-ops like NTUC FairPrice Co-operative and NTUC Income Co-operative provide a wide range of affordable products and services to not only members but to the general Singapore society.

4. Service co-ops

Varying from aged care to employment services, these co-ops provide a wide range of services to their members. Under the healthcare and social support, the Silver Caregivers Co-operative and Runninghour Co-operative are great ones to check out.

To learn more about co-ops,  head over to SNCF’s website! And most importantly, if you qualify for any of the co-ops, you might just want to consider whether it’ll benefit you to join, especially given all the solutions and benefits that they offer.

Disclaimer: This is a sponsored post written for the Singapore National Co-operative Federation to promote greater awareness of co-operatives in Singapore in conjunction with the World Credit Union Conference which is being held in Singapore for the first time. All opinions are that of my own.

10 Days in London – Itinerary and Expenses

So we headed to London for our babymoon to spend some time together before our little one arrives, and here’s our itinerary.



It wasn’t particularly “budget” this time, because it is quite hard to be fully on a budget when you’re pregnant and in an expensive city like London (at time of writing and travelling, the exchange rate was 1.8x of ours), although we did opt for a budget flight and stayed in an Airbnb room to save on costs. Nonetheless, quite a few of you have requested for my itinerary and expenses, so here’s what went on while we were in London!

Overall spending breakdown (in SGD) per person:

Flights $891.00
Accommodation $1,000
Attractions $138
Tours $301
Musicals (3) $246
Travel Insurance $39.20
Transport $154.50
F&B $340
Shopping $235
TOTAL  $3,344.70





Flight tickets
We took a 14-hour flight on Norwegian Air, which I’ve previously shared as a budget carrier where you can get a return ticket to London for $400 if you’re lucky enough to be travelling during off-peak period.


I believe our travel dates coincided with the summer school holidays, so our tickets were twice the price of what I had expected, and we ended up paying $891 per person which included 2 meals, 20kg of check-in luggage, and taxes.

We travelled economy, where the seats were fairly comfortable and we had enough legroom, despite not having paid extra for exit row seats. Toilets were also clean and sanitary. However, the service and food was sorely lacking – the meals we had were extremely small in portion sizes, didn’t taste fantastic at all (I’m not fussy and rarely dislike airline food, so this was a first for me), and they were also extremely stingy with water. When we asked for water, our request was declined and we were asked to purchase bottled water from the snack bar instead. And nope, I didn’t get extra water even though I was pregnant, so I wonder if the crew knows how thirsty pregnant mothers can get sometimes because we really need liquids for our amniotic fluid.


If you’re travelling with Norwegian Air in the future, I highly recommend that you purchase snacks and drinks at the airport before boarding. For our flight from Singapore, we filled up a 500ml bottle and it was barely enough for the both of us (we got a total of 4 cups from the crew throughout the entire flight, which was terrible for me particularly because I was extremely thirsty, being pregnant and all). 

Accommodation
Hotels were extremely expensive in London, and hostels weren’t any better because we needed a private room for the both of us and the prices were almost comparable to that of a budget hotel.

As such, we turned to Airbnb after our friend who lives in London recommended it, and the price was almost half of what we would have had to pay for a 3-star hotel.

To save on transport costs, we looked for accommodation within Zone 1 and Zone 2 in London, as there’s a maximum cap on the Oyster travel card if you travel within these two zones (more on this under Transport).



Transport & Wi-Fi
Norwegian Air takes you to Gatwick Airport instead of Heathrow, so to get to central London, you need to take the train. You can choose from either the Gatwick Express (£22) or the normal Southern train, which is so much cheaper (cost varies depending on your location) and almost equally as fast. If you don’t mind a slower but cheaper journey, you can also take the Piccadilly Line for (£3.10) which is all but 15 minutes longer compared to the Gatwick Express. 


Navigation was settled through a mobile app, Citymapper, which our local friends told us to download. This was the best transport app for London as it is even updated with bus route changes and train delays (and there are PLENTY in London).

As mentioned earlier, there’s a daily travel cap of £7 on your Oyster card if you’re travelling between Zone 1 and 2, which is why we decided to stay in Zone 2 for our accommodation. However, the buses are generally cheaper at just £1.50 flat if you change within the hour, so if you’re able to plan out your route entirely via buses, I would highly encourage that you do so (the bus routes are extensive in London so it shouldn’t be a problem at all, and travel times are comparable to that of the tube). Otherwise, the tube is the next most affordable (£2.90) whereas the train costs the most (£3.40). We made the mistake of relying 100% on CityMapper for our trips and took lots of train-bus or tube-bus journeys, which cost us quite a hefty sum totalled up and we easily hit the £7 Oyster cap every single day until we realised otherwise! On the second-last day (when we were wiser about the buses), our Oyster card expenses only came to £3. Dang.

Now, also note that unlike Singapore, the trains and tubes are entirely different and have different fares for each! We made the mistake of going to Platform 3 for the train when Citymapper actually meant Platform 3 for the tube, and this mistake cost us a hefty £2.40 just to tap out of the train station and into the tube station, which was just a level downstairs, by the way. Don’t be like us!

For local calls and Wi-Fi, we signed up with EE at the airport which gave us 10.5 GB and 100 minutes of calls, valid for 30 days, for just (£20). There were a few other telco providers, but this was the best value-for-money option we found.

Attractions / Musicals
I did some rough calculations before we flew off and realised that entrance tickets to many of London’s attractions were quite pricey, and the best way to save was to get a London Pass, which gave us access to plenty of attractions and cruises to choose from.

As we were there for 8 days (10 days if you include the 2 days we spent flying), I opted for the 6-day London Pass, which I later regretted because there were so many out-of-town options and free museums to go to at hardly any extra cost! We ended up only using 4 days on our card due to our other trips and musicals, which was a slight waste of money. 

I therefore recommend that anyone visiting London to get the 3-day London Pass instead, which should be sufficient to visit most of the key places! Here’s what we did:

Day 1
Big Bus Tour £34
City Cruises  £18.50
Day 2
Tower of London £24.80
Tower Bridge Exhibition £9.80
HMS Belfast £15.45
Namco Funscape £3
View from the Shard £30.95
Day 3
Churchill War Rooms £21
Westminster Abbey £22
Kensington Palace £17
Day 4
Kew Gardens £15
TOTAL
TICKETS COST £211.50
LONDON PASS £130.90
TOTAL SAVINGS £80.60


If you can, try to take one of the open-top bus tours on the first day of your pass so you get familiarised with the city, which will make it easier for you to navigate during the rest of your trip. We chose Big Bus Tours instead of Golden Tours as we preferred the route there, and took both the blue and red route.



The other attractions I would love to have visited on the London Pass (but which we did not have time for) are:
– Shakespeare Globe Theatre (while you’re there, buy a £5 ticket for a live Shakespeare play in the yard!)
– St. Paul Cathedral
– Winsor Castle
– Chislehurst Caves
– Winbledon Tour Experience

If you’re a Potterhead like me, you’ll probably want to sign up for the Harry Potter Studio & Museum Tour as well. It is a little pricey (we paid 
£89 per person) but includes the 2-hour bus ride to and fro, as well as entrance tickets. It isn’t really worth buying any of the merchandise in the store though unless you’re keen on the wands, as we found lots of Harry Potter stuff for much cheaper in…Primark! No kidding! That’s why I bought most of my Harry Potter souvenirs and clothes in the end.


For musicals, we caught three – Aladdin, Matilda and Harry Potter and the Cursed Child. If you’re looking for last-minute cheap tickets, the best way would be to queue up outside the respective theatre(s) in the morning to snag some crazy deals at £15 or so per ticket! We had a full itinerary and weren’t willing to make a trip just to queue (not as easy when you’re pregnant), so we opted for cheap last-minute tickets online via this website instead. If we had more time in London, we wanted to catch Book of Mormon and the Lion King, but I guess that will have to wait for another time.


Food and other expenses
Food in London is generally quite expensive if you’re eating out, but a cheap trick is to get them at fast food restaurants like McDonalds, KFC or Leons, or even cold meals at the grocery stores like Marks & Spencer, Co-Op, Tesco, Waitrose, etc.


If you eat one cheap (grocery / fast food) meal and one restaurant meal a day, that should help to keep your food budget lean.

Psssst, don’t underestimate the cold meals at the groceries stores – I loved the pastas, fruit smoothies and sandwiches we got from there! If you’re looking for a cheap and quick coffee fix, I also highly recommend the £1 coffees from Marks & Spencer, which we felt tasted wayyyyy better than that of Costa Coffee at just 1/3 the price.

Tap water in London is treated and drinkable, so you can also save by asking for tap water on ice at restaurants instead of purchasing a drink. 


Day trips out of central London
We did a few day trips out of London and loved them so much that I would highly recommend you to consider the same!




1. Lavender Fields at Mayfields
We used the CityMapper app and got there via public transport, although the journey was a little long at 2-hours each. Entrance tickets are cheap at just £2 to enter the lavender farm and walk around, have a picnic, take lots of photos, breathe in the scent of the lavender flowers, etc!



2. Richmond Park
Did you know that you can spot wild deers in London at this park? We didn’t know, until our local friend told us! Although the deers are always roaming around this huge 2000-acre park so some tourists have unfortunately gone and never got to see them, we went on a hot summer day and figured that the deer would be near a water source, so we entered via Roehampton Gate, turned right and walked for 10 minutes as we followed the water stream to eventually reach a lake, and that’s where we found all the deers! 

Although the signs said to stay away from the deers, we saw some locals bring them food and successfully managed to pet them. We didn’t know this tip beforehand so we had to settle for admiring them from a distance. But you didn’t hear this tip from me, because the signs say to stay 50 metres away from the wild deer! 😛



3. The City of Bath and Stonehenge
We did this through a £90 tour with Golden Tours (tip: London Pass holders get 15% off tour bookings!) and it made for a fantastic and relaxing day out. Lunch (or more like a snack box) and a bottle of water was also provided for the long ride, which was quite comfortable. I absolutely adored the City of Bath, and you can even go on a Jane Austen walking tour if time permits. Don’t forget to also grab high tea at the famous Sally Lunn eatery while you’re there! As for Stonehenge…let’s just say it is a place I would definitely visit once in a lifetime but never go back again because there’s hardly anything to see other than just…stones.


Other budget tips
Now, if you don’t intend to get a London Pass (trust me, it’s worth the tremendous savings! I’m usually skeptical of tourist passes like these but I’m convinced about the London Pass, having done my calculations and experienced it for myself), there are still other ways to enjoy London without having to fork out too much for attractions. Here are some tips:

Instead of The Shard, book a slot at the Sky Garden here to get a fantastic view of London, for free!
– Go on free walking tours such as this or this (best to tip after you’re done though)
– Visit the museums and galleries, almost all of which are free! We loved the Natural History Museum most of all.
– Visit other free tourist landmarks like Borough Market, Leadenhall, Trafalgar Square, Buckingham Palace, Big Ben, Piccadilly Circus, Camden Market, etc.
– Walk around London’s fabulous city parks like Hyde Park or Green Park


I hope all the above budget tips and itineraries help you to plan your own vacation to London! 

P.S. Just don’t ask me where we stayed in London as we need to protect our host’s identity. Thanks! All other questions are welcomed. 
With love,

Budget Babe

Saving Money and Getting Loans from Credit Co-operatives (Are they better than banks?)

What is a credit co-operative? Unless you’re in one, most Singaporeans do not know of them nor the important role they play in society. More importantly, you may not be aware that there are plenty of benefits you can get from being a member of a credit co-op.

Co-ops are basically regulated social enterprises. They are organised on a voluntary basis, democratically controlled and member-owned, to achieve the common social or economic aim that benefits their members and/or society at large. In fact, co-ops are founded on values of self-help, mutual assistance, equality, care for community and co-operation. 

As its name suggests, credit co-ops provide financial services to their members, and as I mentioned earlier, there are plenty of benefits you can get from being a member of a credit co-op – including savings with attractive interest rates, access to loans at competitive interest rates, and more. They help you grow your savings/nest egg for the future and/or if you need to take loans, you won’t be saddled with a huge debt.

You might not be familiar with the term credit co-op, but surely you’ve seen some of these brands before! Take a look:

Some co-ops are profession-based in the sense that only individuals belonging to certain professions can join as members. For instance, if you are a teaching staff or full-time employee of a school, you can join the Singapore Teachers’ Co-Operative Society Ltd. Whilst staff from the Ministry of Home Affairs, Corrupt Practices Investigation Bureau, Certis CISCO, AETOS etc. can join the Singapore Police Co-Operative Society. So do check if your organisation has a credit co-op that you can join! For the rest of us, there are also credit co-ops that are open to public membership e.g. TCC Credit Co-Operative. There’s a really great introductory article that you can read here for more information on some other co-ops in Singapore.

How You Can Grow Your Savings with Credit Co-Ops

One good example is that of the Singapore Teachers’ Co-Operative Society Ltd, which gives an interest rate of up to 3.08% per annum on its bonus savings account upon maturity. This is relatively higher than similar products offered by financial institutions.

The Singapore Government Staff Credit Co-Operative Society Ltd is another good example. It is a co-op for public service officers looking to build financial resilience and a “nest egg” for the future. If you are employed in the Singapore Civil Service, Statutory Boards and Government-linked Companies, you are eligible to join them as a member.

Their member benefits include:

·      Maximise financial growth through savings

·      Receive FD for better returns

·      Loans at reasonable interest rates

·      Hospitalisation benefits

·      Educational awards

·      Free insurance coverage

·      Loyalty benefits

·      Funeral fund grants

·      Birthday gift

·      Provision of family membership and other privileges such as highly subsidised overseas tours and annual gala dinner

Taking a Loan with Credit Co-ops

Here on this blog, I’ve always advocated avoiding loans if you can help it (with some exceptions to the rule, such as a housing loan) and paying them off as soon as you can before you spiral down the path of bad debt.

I’ve also mentioned numerous times at my talks that credit card debt is something you should fear and be wary of. The interest rate on your credit card (if you don’t pay off in time every month) is much higher than most people think. It is easy to fall into the cycle of simply paying the minimum $50 payment each month, but many people forget that there are plenty of other rollover charges, not to mention an exorbitant interest rate. That is how credit card debts can so quickly spiral out of control! UOB and DBS charges 25.9% per annum whereas OCBC charges slightly higher interest of 25.92% on all outstanding amounts owed.

Borrowing from a moneylender, especially an unlicensed one (like loan sharks), can be even more detrimental. If you’re not careful, your debt can easily snowball into an avalanche that you may not be able to pay off even if you sold all your assets.

But what about if one REALLY is cash-strapped and needs a loan?

Well, if I ever had to recommend a loan, then I would say to go for a loan from a credit co-op instead. They are an alternate means of seeking financial assistance when you need cash, and since they’re less profit-driven than most commercial enterprises, credit co-ops tend to be more willing to go the extra mile for their members. This includes extending loans to lower-income members or even rescheduling members’ loans, and they can even work out a debt restructuring plan with you to help clear it off.

AUPE Credit Co-Operative Limited, for instance, distributes loans to its members for the purpose of:

·      Children’s educational needs

·      Medical expenses

·      House renovation

Members of co-ops can take short to medium term loans as the interest rate is relatively lower according to their websites. This is a HUGE difference if you compare to the interest charged by credit cards and moneylenders and are often even more competitive than personal loans offered by commercial banks.

So if you ever need to take a loan (although I sure hope you’ll never have to, but I understand life has a funny way of throwing us unexpected surprises sometimes), the ONLY place I’ll recommend you to go would be to a credit co-op rather than the usual credit card loans or seeking out moneylenders which many people resort to.

If this has piqued your interest, and you’re keen to learn more about the various co-operatives in Singapore, head over to SNCF’s website to find out more!

Disclaimer: This is a sponsored post written for the Singapore National Co-operative Federation to promote greater awareness of credit co-operatives in Singapore. All opinions are that of my own.

IPO Analysis: Is Astrea IV Private Equity Class A-1 bond worth a BUY?

Astrea IV Class A-1 bonds are the talk of the town right now, and I’ve received so many DMs about this so I’m finally sitting down to evaluate and write this.


Details:
– The bond is launched by Astrea IV Pte. Ltd, which is an indirect subsidiary of Temasek 
– 4.35% interest rate offered
– IPO applications close at 12 noon on 12 June 2018
– You can apply through ATM or online banking via DBS, POSB, OCBC or UOB
Minimum subscription amount: S$2,000
– You CANNOT use your CPF or SRS funds to apply for this bond.
– Bond starts trading on SGX-ST on 18 June 2018

What are you really buying into?

Now, don’t get misled by the above headline published in The Business Times last week – this is NOT a Temasek bond. Rather, it is a bond issued by one of their subsidiaries.

This is a really new and unique asset class because they’re neither government-backed nor corporate bonds. Instead, they’re private equity bonds. This is the 4th private equity bond that is being issued by Astrea, and the first one that is being opened up to retail investors. 

These Astrea IV Class A-1 bonds (“Astrea bonds”) will then be used to invest across 36 private equity funds, which are invested into 596 underlying companies. Traditionally, I would dig up details about the investment assets, but since there’s 36 funds and almost 600 companies, that’s an almost impossible task because much information isn’t available about these private companies, and neither does anyone have that much time anyway to scour through all.

The 36 PE funds. 


If you’re unfamiliar with private equity, what they basically do is to invest in distressed or promising companies, go in with their expertise and restructure or turn the business around (usually making operational or financial improvements), with the final aim (usually) being to sell it off for a profit. As a result, the returns on such investments (when successful) can be tremendous – think 2 to 3 digit percentage figures at least. 

So in this case, when you buy these Astrea bonds, you’re pooling your cash which will then be used to invest into these funds and underlying companies. The profits will then be used to pay the interest on your bond (4.35%) and finally return you your capital after 5 years.

Given the sheer number of funds and underlying companies, coupled with the fact that the exposure to a single partner / company / sector is quite low (even Blackstone Capital Partners, which is the largest, is merely 10.6% of NAV), the risk here is quite minimal even if one or some fold.

(There’s a step-up interest portion in these Astrea IV bonds if they’re not reclaimed after 5 years i.e. on 14 June 2023, but I’m not going to go into that because I’ve no intention to hold it for any longer than that, due largely to opportunity cost. There may be a bonus payment of up to 0.5% at redemption if performance condition is met.

For those of you who are keen on a longer-time holding period, there will be a 1% per year interest step-up rate if the bond is not yet redeemed after 2023.)

Who’s behind the bond?

Okay, so now that you know this is NOT a Temasek bond…then who exactly is behind it? That’s Azalea Investment Management, which was set up in 2016 and is a wholly-owned subsidiary of Azalea Asset Management, which is then owned by Temasek Holdings.

Although they’re relatively new as an entity, Azalea’s management team apparently has extensive experience and institutional knowledge in the private equity space. The senior management team comprises of PE veterans and is led by Ms. Margaret Lui-Chan, who has been with Temasek since 1985.

Temasek and its affiliates have also launched 3 Astrea investment vehicles prior to this. 
Check out this really informative Fitch report for more information.

Why is the yield so high?

That was the first question that came to my mind when I read about the bonds being launched. Compare this to the Singapore Savings Bonds which is pretty much 100% risk-free (since it is backed by the Singapore government) and yields 2.63% for this month’s issuance. Now contrast this to a riskier corporate bond such as Aspial’s bonds, which were launched for 5.25% previously.



If this is from (albeit indirectly) Temasek, the next financial juggernaut in Singapore, then why is the yield so high?! Wouldn’t it make more sense to price it at about 3+% yield, since the brand name Temasek alone would warrant some sort of a premium and perceived safety net?

According to Ho Ching, she says the main aim of this bond is largely to help retail investors in Singapore supplement their retirement income

Why is the yield so low?

You didn’t read that wrong 😛 for investors who truly understand the huge kind of returns that are seen in private equity (remember, 2 or even 3 percentage digits can be fairly common, if they spot the right gems / get lucky on the sale), why is the yield being offered to A1 bondholders here so low at just 4.35%?

This can be easily explained using high risk, high returns; low risk, low returns.

Firstly, the minimum investment amount to participate in Class A-1 bonds is just S$2,000, in contrast to Class A-2 and B (US$ 200k each).

The risks in Astrea IV Class A-1 bonds in terms of default are also significantly lower than the other bonds issued in this exercise, as Class A-1 bonds will be redeemed first in any event before A-2 or B. This means that even if Astrea faces liquidity or financial problems, A-1 bondholders will be paid first.

Since the risk undertaken by class A-2 and B bondholders are higher (they only get paid after A-1), they’re compensated with a higher yield in order to incentivise them to buy these bonds. Unfortunately, you don’t get to buy them as they’re not open to the public and have already been fully subscribed anyway.


Are my returns guaranteed?

No. You MUST understand this point.

However, the risk of default is pretty low, in my opinion, due to how this has been structured. In the event of a shortfall, Astrea IV also has a 10-year committed capital call facility with DBS which will step in to cover the payments 🙂

When can I get back my money?

You can sell the bonds anytime after 18 June 2018 on SGX, just like how you would with ordinary stocks. Otherwise, you can also choose to hold the bonds until its call date on 14 June 2023, or even longer if you want to be entitled to the step-up interest (provided the bonds aren’t fully redeemed by then).

Is there a chance that I’ll lose my money? Will Temasek save us if anything happens to Astrea?

The direct risks to bondholders which you should be aware of are:

– the bond price might fall below its issued price on the bond market
– the Manager might not be able to fulfil its interest repayments
– the Manager might not be able to reclaim the bonds and pay back the original capital sum to bondholders

Now, it is important to note that Temasek Holdings is not guaranteeing these bonds. This is even explicitly mentioned in the prospectus, that is, if you bothered to read through (all 306 pages of) it. Therefore, if the bond manager fails to repay the bonds and/or interest, there is no guarantee that Temasek will step in to save bondholders.


Are they capable of repaying the bond interest and capital? 

As with all bonds, you should always evaluate the financial health of the investment manager before you decide whether to buy or stay out. Remember, that’s the main reason why I said I was staying away from Aspial and Hyflux bonds back then?

Since Astrea’s financials are not entirely public and we can only rely on the numbers presented in their prospectus covering a limited timeframe of August 2017 – March 2018, a few figures to highlight are:
– USD 48.6 million of profits generated
– USD 342.5 million was used for their investing activities

That doesn’t really tell us much, especially when there’s no year-on-year comparison to gauge how they’ve fared. Therefore, we can only look to their Loan-to-Value below, where you’ll see that Class A-1 bonds have a LTV of 16.5%, which is relatively low, and thus the chances of default should also be quite low since only $181 million in the reserve account is needed to fully redeem Class A-1 bonds.

Sounds good, but what’s the catch?!


I’m a huge skeptic, so this deal honestly sounded too good to be true to me. But after scouring through the prospectus and various bloggers / investment houses’ take on this bond IPO, I struggle to find anything realllllly negative about it.

Initially, I thought, is this some conspiracy?! Why would Temasek issue a bond with such a high yield?! Can’t they get institutional or corporate loans for this? I bet companies would be scrambling just to subscribe! Or just get the private banks to issue it to their high-net-worth customers? Then I thought, or maybe they’re in financial trouble, that’s why they’re raising this money from us mortals? But then I realised that the total sum of S$242 million raised really doesn’t count for much, considering Astrea’s access and connections to Temasek Holdings.

My cousin attended the talk on this bond yesterday and I got her to ask them this question on my behalf. The answer by their CEO, Ms. Margaret Lui-Chan was that their vision is to open to retail investors. Lol.

So I can only say, looks like Ho Ching might be right after all, and this bond truly is being created to help retail investors? You can be the judge.

Disclaimer: I am NOT sponsored, nor do I have any connections nor payment from Temasek or Astrea or anyone, for that matter, in exchange for this post.


TLDR Summary
This is probably the longest IPO analysis I’ve ever written for a single product, so if you got bored halfway, I don’t blame you. Here’s a quick breakdown of my view towards Astrea IV Class A-1 Bonds:


Pros
– This is one of the safest bonds I’ve seen in a long time, especially given the A-rating by two reputable rating agencies (Fitch and S&P), not to mention Ho Ching putting her own personal name behind this (I assume, since she didn’t correct the BT article nor ask them to apologise / correct / take it down).
– Long track record since this is already the 4th Astrea bond being launched, with the first in 2006.
– There are some quality PE managers in the 36 funds listed above, including Blackstone and KKR. Private equity folks should recognise these names 😉
– The Sponsor owns 55% equity interest, so they do have their skin in the game and are less likely to want to see this fail.
– Their marketing is rock solid and has definitely generated the hype needed for this to become over-subscribed. Talk about FOMO!
– The first few pages of their IPO prospectus is just lovely! Kudos to whoever designed it 😀

Cons
– It is not easy to understand, and is the first of its kind for retail investors.
– It was slightly mis-marketed (in my opinion) since there was so much emphasis and hype on their connections to Temasek, leading many investors to think this is essentially a Temasek Holdings bond.

You can also watch this short (marketing) video explaining the bonds here:



So Budget Babe, are you subscribing?!

Considering the hype and 4.35% yield, I’ll be subscribing to these bonds and leave it as part of my bond portfolio (together with my CPF). After all, I’m the biggest skeptic of most corporate bonds, but this is one in recent years that actually managed to get my attention.

With their connection to Temasek, I doubt that Astrea will default on the bond interest payments, and I don’t think their bond prices will fluctuate too much on the open market either.

But please don’t follow me – do your own homework! Here’s the full 306-pages of the bond IPO prospectus as well as the Fitch report for you to read before you make your next move. Nonetheless, I’m betting this is going to be oversubscribed, and can only hope that I get some allocation from my application!

With love,
Dawn